Employee Payroll

When you own a business there are many different forms you must make out each month and year. These forms pertain solely to your business and must be filled out by the deadline set by the IRS. One of these forms deals with employee payroll. Knowing exactly what employee payroll is and what the requirements are is important to you as a business owner.

Employee payroll is exactly what it says it is: the wages you pay to any person working in your employ. Whether this pay is weekly, bi-weekly or monthly doesn't matter. Any person who performs work for you that you pay directly as a member of your company is considered to be an employee.

With that being said, there are rules and regulations that must be followed in paying any employee. Taxes must be removed (or withheld) from their earnings before you can issue a paycheck to them. There are federal income taxes and depending on your state and location, state and city taxes may also apply. Along with these, social security and Medicare taxes are to be withdrawn and your states unemployment taxes. There may also be other state-required taxes you should withhold from paychecks. You can find out exactly what taxes are to be withheld by checking your state’s tax Website. Once you have withheld all taxes that apply in your state, a paycheck can be issued to the employee.

As a business owner, you must keep very careful and accurate records of all wages that are paid to all employees. You must report these withholdings to the IRS quarterly and also to your state tax department if it applies. Any monies that were withheld on behalf of the IRS will have to be sent in to them when you make out your quarterly reports. It is essential that the money you withheld and the money you send with your reports is accurate. All employee wages for that quarter are to be included, even if the employee no longer works for your company.

Each year when you file your business income tax, you will be able to deduct all of the employee wages that were paid during the year. Having accurate records of your quarterly reports will help you to put all of this information together.