Questions about Payroll and Payroll Taxes? We Have the Answers.

Dec 11, 2019 | Business Strategy, Income Tax

FAQ Payroll & Payroll Taxes

As businesses grow & progress there are many reasons to engage payroll & the payroll tax process. First, & foremost, is the need for assistance in the form of employees. Second, there might be a need to meet the S corporation requirement for the shareholder to have adequate payroll. Below are some common questions that we receive, & we hope that they can assist you.

Q: What is the reason that S corporation shareholders (depending on the situation) require payroll?

A: The IRS has an adequate payroll requirement. This is to encourage the payroll tax & proper reporting for the new structure.

Q: How often do I pay payroll taxes?

A: This depends on how much in gross payroll that you have per month. The most common payment schedule is monthly for form 941 payments & State withholding with quarterly unemployment. However, please contact your payroll provider to confirm your payroll tax payment schedule.

Q: What about the year-end?

A: Year-end requires a couple of additional forms. This would include a W-3 with forms W-2 for your employees & form 940 for Federal Unemployment.

Q: What forms are required with payroll?

A: There are forms that are monthly, quarterly & annually & are laid out below. These forms are mainly for informational purposes. We have identified the common scenarios below:

Form 941 –

This form is an informational return that is filed quarterly. This form rarely requires payment & is usually for informational purposes. Of course, please speak with your accountant as some circumstances may change this scenario. The taxes reported on this form are Federal Withholding, Social Security & Medicare. The Federal Withholding is the employee withholding. Social Security & Medicare are both the employee & employer portion.

State Withholding Form –

There will usually be a state form for information filing. This is to report the state employee withholding. This form may or may not require payment. Depending on your state, your filing may be your payment.  Check with your payroll provider to confirm your state filing requirements.

State Unemployment Form –

This form is filed quarterly &, depending on your payment schedule, usually requires a form of payment for the quarter with the filing.

As you can tell, payroll varies depending on your state & amount that you are offering in payroll. We strongly encourage that you listen to your payroll preparer & pay close attention to any payroll correspondence that is sent. There will be forms to sign or payments that will be remitted.