First paychecks, how to withhold?

[tw1012]

I am cutting my first checks to my employees on a wash I just bought.

Here is the list I have so far:

Fill out:
W-4
I - 9

Withhold:

Federal Income Tax ( Using the chart from the Circular E)
Social Security 12.4%
Medicare 2.9%

Am I forgeting anything?

 

[Earl Weiss]

Does your state require Withholding as well?

 

[tw1012]

No, I don't think so, I am in Texas.

I think I have it figured out

I use the chart for Fed withhold
I divide the 12.4 and charge the employee 6.2% for the social
I divide the 2.9 and charge the employee 1.45% for the medicare

does that sound right?

 

[Washmee]

No, I don't think so, I am in Texas.

I think I have it figured out

I use the chart for Fed withhold
I divide the 12.4 and charge the employee 6.2% for the social
I divide the 2.9 and charge the employee 1.45% for the medicare

does that sound right?

Employee share of SS is only 4.2% right now. Its part of the last Obama stimulus.

 

[jfmoran]

Some states (like PA where I am) have an employee paid SUTA (State Unemployment Tax), check to make sure you don't have one

 

[rzeavy]

Go to a C.P.A in your area to avoid any mistakes.

 

[soapy]

Do not forget about FUTA ( federal unemployment tax. Your Suta and futa tax will be determined by the state. FUTA tax will be around 8/10th of a percent and SUTA will probably be 2% or more. You are required to pay these and they are not witheld from employee wages.

 

[pitzerwm]

RZ is right, go to a CPA first and have him set it up for you and then you can probably do it from then on, but it will cost you a lot of money if you screw it up in the beginning and it might be years before you get nailed and the fines are real ugly.

 

[Sequoia]

Cpa

I think a CPA would be quite expensive to set up payroll.

Why not just hire Paychex? They specialize with this, will get everything right plus will provide all the quarterly and annual forms.

 

[borumrm]

There are many free on line paycheck withholding calculators. Just google paycheck withholding ... might even find one with suta/futa ... I still use my cpa to do this though because it is one of the things I don't like doing.

 

[Washmee]

Its really not rocket science. Just get a software program like this one and you should be OK.

http://www.staples.com/QuickBooks-Basic-Payroll-2011-for-Windows/product_900574

I've run over 700 payrolls and only made a mistake once or twice. The biggest mistake you could ever make, is to not deposit the taxes you collect. The fines and interest are crazy.

 

[rph9168]

With most CPA's you get a break on them doing your taxes if you use them on a monthly basis for payroll, monthly taxes and possibly a simple P & L. If you don't mind doing it yourself Quickbooks has a payroll program you can use.

 

[wader]

Like Washmme said....get Quickbooks, or Simply Accounting. I really cant imagine doing these figures on my own. These will save you a ton of time, and they have great reporting features that will definately help you out.

 

[mjwalsh]

I am cutting my first checks to my employees on a wash I just bought.

Am I forgeting anything?

The list has been covered by yourself & others. I did it manually for a number of years but when I got acquainted with a database program --- it seems like a better fit to go that route. The percentages & equations are pretty straightforward & are found in Circular E Pub 15. ETFPS is nice for staying current with the payments online. They raised the threshold per quarter to $2500 gross payroll --- but it is still nice to pay monthly just in case the payroll spikes. At the beginning of the year I have a separate database table for making needed adjustments such as the stimulus 4.2 vs 6.2 for social security on the employee side that Washmee mentioned. 941 must be filed even if you do not owe anything & it must match your ETFPS.

Our state does the calcs somewhat for you as long as you have the gross for its state requirements. Their formulas for Workers Comp are kind of complicated so it might be hard to verify their accuracy.

Does Quickbooks do everything for you guys --- do you just put in the employee & hrs???

The SSA Online filing to autogenerate your W3 & W2s makes sense for us.

Independent contractors who are non incorporated all need a 1099 from you if it is over $600 for the entire year with copies sent to the state.

MJ