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’ve started this monthly series to focus on state-specific tax considerations, to help you keep up with what’s changing around you.
We’ve previously covered Washington, New York, and Pennsylvania. This month, our spotlight turns to Oregon (OR). While this is by no means a comprehensive list of Oregon tax and payroll regulations, we are highlighting a few key things to know.
On July 1st, Oregon introduced a statewide transit tax. It requires that employers withhold one-tenth of 1 percent from:
- Wages paid to Oregon residents (regardless of where the work is performed)
- Wages paid to non-Oregon residents performing work in Oregon
Note: If you are required to withhold Oregon transit tax, you’ll want to ask your payroll provider if they support this withholding.
Last month, we covered Washington’s lack of income tax—which can make some calculations easier for both the employer and employee.
Oregon does require state income tax withholding, but their requirements are less complex than Pennsylvania’s Local Service Taxes:
- As an employer either headquartered or doing business in the state of Oregon, you must withhold tax from any wages paid out to Oregon residents for work performed in or out of state
- As an employer either headquartered or doing business in the state of Oregon, you must also withhold state taxes from wages paid to nonresidents for work performed in the state of Oregon
- For employers located outside of Oregon, there is no requirement to withhold state tax, even from Oregon residents. It is generally recommended that you do withhold these taxes for the convenience of employees residing in Oregon, however.
Oregon state law requires that employers create and maintain regular paydays. Paydays must occur within 35 days of each other, and for new employees, the first payday cannot occur more than 35 days from the date they started work.
For last paychecks, there are different requirements depending on the circumstances of separation:
- If an employee resigns with less than 48 hours’ notice (exclusive of weekends and holidays), the final paycheck must be issued within 5 business days, or on the next scheduled payday, whichever comes first.
- If an employee gives notice of at least 48 hours, the final paycheck must be issued on the final day worked, unless that day falls on a weekend or holiday. In that case, the check is due on the next business day.
- If an employee is terminated, the final paycheck is due no later than the end of the following business day.
- As in the case of termination, if there is mutual agreement between employee and employer for separation, the final paycheck is due by end of day on the following business day.
- If employment is related to state and county fairs, and terminates on weekends or holidays, the check is due by the end of the second business day after the termination.
As you can see from our coverage of Oregon, every state differs when it comes to payroll and taxes. So whether your business is in the Beaver State, the Empire 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:
- Do they have your back when it comes to payroll taxes?
- How long is their payroll processing time?
- Do they offer extended support hours on evenings and weekends?
We’ll be back September 26th with a spotlight on Florida taxes.
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.