As a small business owner, processing payroll is just one item on your to-do list, but ever-changing regulations and tax code updates can make it the most time-consuming task in a given week. These tax updates occur at the federal, state, and local levels, and depending on where your business is based and where your employees live, some small businesses have it tougher than others. We’re starting this monthly series to focus on state-specific tax considerations, to help you keep up with what’s changing around you.
This month, we are focusing on New York. While this is by no means a comprehensive list of New York tax and payroll regulations, we are highlighting three key things to know.
New York Doesn’t Reciprocate (Taxes)
As an employer, the first thing you should know about New York is that though it is often referred to in the context of the “tristate” area of New York, New Jersey, and Connecticut, New York does not have tax reciprocity with its neighboring states. We’ve previously covered what state tax reciprocity means and which states offer it, but the gist is this: if you or your employees live in New York but work in New Jersey or Connecticut (or vice versa), you will pay income taxes in both states, as a resident where you live and a non-resident where you work.
When It’s Time to Say Goodbye: Final Paycheck Rules
Every business has employee turnover and, depending on the nature of your small business, it might be a routine occurrence (for example, if you are a seasonal employer). It’s important to understand the final paycheck requirements for your state to ensure that your departing employee receives their final paycheck on time according to state rules. Under New York labor law, an employer is required to pay all wages owed to the separating employee on or before the next scheduled payday. This rule applies whether the departing employee quit or was terminated.
Note: At times an employer might need to run an expedited, unscheduled payroll—if you are looking for a payroll provider you will want to ensure they offer flexible features to support your small business needs.
The New York Paid Family Leave (NY PFL) program went into effect on January 1, 2018. Under the program, which is designed to be 100% employee-funded, eligible New York state employees may take paid family leave.
Per New York’s Department of Financial Services Decision on Premium Rate published on June 1, 2017, "the maximum employee contribution for coverage beginning January 1, 2018 shall be 0.126% of an employee's weekly wage up to and not to exceed the statewide average weekly rate."
New York State employers must ensure that their employees are aware of NY PFL and that their policies comply with the law—this includes displaying a poster regarding NY PFL in the workplace.
Note: If you need more information on how to implement NY PFL for your small business, you should contact your insurance carrier or accountant. The New York State government website also provides details on NY PFL, with resources for both employers and employees. If you are considering a payroll provider, you’ll want to ask how they support employee contributions to this program through payroll.
As you can see from our coverage of New York, every state differs when it comes to payroll and taxes. So whether your business is in the Empire State, the Golden State, or any state in between, you want to be sure that you are keeping up with tax and regulatory changes at the federal, state, and local levels. This can be hard to do on your own, but there are resources to help.
If you’re considering outsourcing payroll to help cut down on administrative tasks and mitigate tax risk, here are some things to consider in selecting a provider:
This website contains articles posted for informational and educational value. SurePayroll is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, SurePayroll. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant. If you require legal or accounting advice or need other professional assistance, you should always consult your licensed attorney, accountant or other tax professional to discuss your particular facts, circumstances and business needs.