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ayroll depository records Determine proper tax forms for use in business ounts Prepare current asset account records Prepare fixed asset account records Set up expense account records Set up income account records Set up payroll system Prepare payroll time sheets Prepare p ? ? ? ? ? ? ? ? ? ? ? Set up your business chart of accounts Open a business checking account Prepare a check register Set up a business petty cash fund Prepare a petty cash register Set up asset accour record keeping system as your business changes. Your system is only valuable to you if it fits your own needs. Understanding Financial Record Keeping 11 Financial Record Keeping Checklist ? ? ?thods of tracking certain aspects of your operations. You may decide that some of the information that you are collecting is unnecessary in your particular type of business. Don't be afraid to alter yyour individual business. Keep in mind that as your business grows, your needs may change. In addition, as you become more familiar with your record keeping, you may decide that you need additional me keeping needs. No two businesses will have identical financial record keeping requirements. You must determine which financial facts and figures will be most important in the successful operation of cords will also track either things the business owns (assets) or things the business owes (debts). Note that it is important to take the time to carefully analyze your business in light of its recordat you make and every financial record that you create will fit into one of these four main categories. Your transactions will either be money coming in (income) or money going out (expenses). Your reng system is the chart of accounts for your business. A chart of accounts will list each of the income, expense, asset, or debt categories that you wish to keep track of. Every business transaction thds are designed to be used on a calendar year basis. Within these basic parameters, the system can be individually tailored to meet the needs of most small businesses. The backbone of the record keepiied small business accounting system that is explained in this kit is a modified singleentry accounting system. It is presented as a system for accrual-basis accounting for small businesses. The recorr ended, the business year for reporting may not be a full year. Thus, even for those who choose to use a calendar year, the first year may actually start on a date other than January 1st. The simplifesses, the choice of a calendar year period is perfectly adequate and, in most cases, will simplify the tax reporting and accounting record keeping. In the year in which a business is either started o year accounting period. If a fiscal year period is considered necessary, please consult a tax or accounting professional as there are complicated rules to comply with. For the majority of small businhere is a valid business purpose that supports the use of a fiscal year. This generally complicates the reporting of income and should be avoided unless there is an important reason to choose a fiscal that do end on December 31st. There are complex rules relating to the choice of fiscal year accounting. Partnerships and S corporations may generally choose to report on a fiscal year basis only if t between a fiscal year accounting period and a calendar year period. A fiscal year consists of 12 consecutive months that do not end on December 31st. A calendar year consists of 12 consecutive monthsing far outweigh the disadvantages. Understanding Financial Record Keeping 10 Accounting Periods A final item to consider is the accounting period for your business. A business is allowed to chooseee with this and insist that only double-entry accounting is acceptable. For the small business owner who wishes to understand his or her own company's finances, the advantages of single-entry account-entry records for beginning small businesses, and states that this type of system can be "relatively simple...used effectively...and is adequate for income tax purposes." Many accountants will disagrust be entered in two separate places in the records. The benefits of ease of use of a single-entry system far outweigh the disadvantages of this system. The Internal Revenue Service recommends singlerds, although the double entry system has more ways available to double-check calculations. Double-entry record keeping is, however, much more difficult to master, in that each and every transaction mge in the system must be made. Accounting Systems In addition, there are two basic types of record keeping systems: single-entry and double-entry. Both types are able to be used to keep accurate recois made, approval from the Internal Revenue Service must be obtained before the method can be changed. After you select the type of accounting you will use, please consult a tax professional if a chanaid. The vast majority of businesses will wish to use the accrual method of accounting. A business must choose to keep its records either on the accrual basis or on the cash basis. Once this decision they are due, even if they are not yet paid. In other words, accounts payable (bills owed by the business) are considered expenses to the business when they are received, not when they are actually p receive the income. In other words, accounts receivable (bills owed to the business) are considered as income that has already been received by the business. Expenses are considered and recorded whensoever, it must use the accrual method of accounting. The accrual method of accounting counts income and expenses when they are due to the business. Income is recorded when the business has a right tosed by those few businesses that are solely service businesses and do not sell any materials to their customers at all, even a few spare parts. If a business sells any type of product or material what are paid. With cash accounting, there is no effective method to accurately reflect inventory costs. Thus, Internal Revenue Service regulations require that the cash method of accounting may only be usic methods for measuring transactions: the cash method and the accrual method. Cash method accounting is a system into which income is recorded when it is received and expenses are recorded when theyg Financial Record Keeping 9 Accounting Methods There are a few more items that must be understood regarding financial record keeping. First is the method for recording the records. There are two baexpenses Utility expenses Wages and commissions Estimated General Expenses Total Estimated Miscellaneous Expenses Estimated Total Expenses Estimated Pre-Tax Profit (Income less Expenses) Understandine expenses Office rent/mortgage expenses Repair expenses Office supplies Sales taxes Understanding Financial Record Keeping 8 Federal unemployment taxes State unemployment taxes Telephone/Internet ns Office equipment expenses Freight and shipping expenses Business insurance expenses Business interest expenses Legal and accounting expenses Business meals and lodging Miscellaneous expenses Postage Total Estimated Miscellaneous Income Total Estimated Total Income ESTIMATED EXPENSES Advertising expenses Auto expenses Cleaning and maintenance expenses Charitable contributions Dues and publicatioing 7 ESTIMATED PROFIT AND LOSS STATEMENT For the period of: ESTIMATED INCOME Estimated Gross Sales Income Less Estimated Cost of Goods Sold Estimated Net Sales Income Total Estimated Service Incomhey represent the health of a business are keys to keeping control of the finances of any business. Attached below is a sample Estimated Profit and Loss Statement. Understanding Financial Record Keepe than 80 percent ownership of the business, a very healthy situation. There are numerous ways to analyze the figures on these two financial statements. Understanding what these figures mean and how t owner and what proportion is owned or owed to someone else. Looking at Smith's balance sheet, we can see that the owner's equity is $1,670 of assets of $2,070. Thus, we can see that the owner has morusiness. The figures on them can be used for many purposes to understand the operations of a business. The balance sheet shows what proportion of a business's assets are actually owned by the businesse - cost of goods sold - expenses = profit. These two types of summary reports, the balance sheet and the profit and loss statement, are the basic tools for understanding the financial health of any bo matter their size. For a pure service business, with no inventory of any type sold to customers: income - expenses = net profit. For a sales-type business or a sales/service combined business: incom performed as follows: Net sales income - Net expenses = Net profit $ 200.00 $ 150.00 $ 50.00 Again, this simple setup reflects the basics of profit and loss statements for all types of businesses, nsales income - Cost of food = Net sales income Operating Expenses + Interest payments = Net expenses $ 250.00 $ 50.00 $ 200.00 $ 100.00 $ 50.00 $ 150.00 Thus, for the month of July, Smith's businessrent amounted to $100, and interest payments on the equipment loan were $50.00. Thus, Smith's profit and loss statement would be prepared as follows: Understanding Financial Record Keeping 6 Gross ith had the following transactions during the month of July: $250 worth of food was sold, the wholesale cost of the food that was sold was $50.00, the cost of napkins, condiments, other supplies, and he sales income minus the cost of the product to the seller. This inventory cost is referred to as the cost of goods sold. A profit and loss statement begins with a sale. Back to the food business. Sm making the income, the cost of the product that was sold must also be taken into account. This is done through inventory costs. Thus, for sales income, the income from selling a product is actually type. With service income, the profit can be determined simply by deducting the expenses that are associated with making the income. With sales income, however, in addition to deducting the expenses ofe need to consider inventory costs. Service income is income derived from performing a service for someone (cutting hair, for example). Sales income is revenue derived from selling a product of some tincome, then the business has a loss for that period of time. Income can be broken down into two basic types: service income and sales income. The difference between the two types of income lies in thy money that it has paid or will pay out during a certain period. Simply put, if the business has more income than expenses during a certain period, it has made a profit. If it has more expenses than nt is one of the key financial statements for the analysis of your business. Generally, income for a business is any money that it has received or will receive during a certain period. Expenses are anced by advertising expenses? Are production costs higher this quarter than last? Do seasons have an impact on sales? Are certain expenses becoming a burden on the business? The profit and loss stateme revenue figures will allow you to judge the growth or shrinkage of your business over time. Numerous other comparisons are possible, depending on your particular business. How have sales been influenhly performances over a single year to determine which month was the best or worst for your business. Quarterly results will also be able to be contrasted. The comparison of several annual expense andr a particular time period. As you begin to collect a series of profit and loss statements, you will be able to conduct various analyses of your business. For example, you will be able to compare mont return preparation. A profit and loss statement, however, provides much more than assistance in easing your tax preparation burdens. It allows you to clearly view the performance of your business ove profit and loss statement monthly, quarterly, or annually, depending on your particular needs. You will, at a minimum, need to have an annual profit and loss statement in order to streamline your taxry of the income and expenses of the business during a certain period. Profit and loss statements are sometimes referred to as income statements or as operating statements. You may choose to prepare aWorth or Capital Surplus + Stock Value Understanding Financial Record Keeping 5 The Profit and Loss Statement The other main business report is the profit and loss statement. This report is a summaABILITIES Current Liabilities Accounts Payable Miscellaneous Payable Total Current Liabilities Fixed Liabilities Loans Payable (long-term) Total Fixed Liabilities Owner's Equity Total Liabilities Net Current Assets Fixed Assets Equipment (cost) Autos and Trucks (cost) Buildings (cost) Total (Less Depreciation) Net Total Add Land (cost) Total Fixed Assets Total Miscellaneous Assets Total Assets LIbusiness's Owner's Equity. Understanding Financial Record Keeping 4 CURRENT BALANCE SHEET As of: ASSETS Current Assets Cash in Bank Cash on Hand Accounts Receivable Inventory Prepaid Expenses Total largest: assets = debts + equity or assets - debts = equity. Remember, both sides of the equation always have to be equal. Attached below is a sample Balance Sheet that you can use to determine your worth of $1,670. If Smith paid off all of the debts of the business, there would be $1,670 left. This basic method is used to determine the net worth of businesses worldwide, from the smallest to thet Foods is as follows: Total Assets - Total Debts = Owner's Equity $ 2,070.00 $ 400.00 $ 1,670.00 Understanding Financial Record Keeping 3 That's it. The business of Smith's Gourmet Foods has a neto find what Smith's equity in this business is, we need to subtract the amount of the debts from the amount of the assets. Remember: assets - debts = equity. Thus, the owner's equity in Smith's Gourme have been collected on food sales. Thus, the debts of Smith's Gourmet Foods are shown as follows: Accounts it owes + Loans it owes + Taxes it owes = Total Debts $ $ $ $ 100.00 200.00 100.00 400.00 T $ 2,070.00 Smith also has the following debts: $100 owed to the supplier of the food, $200 owed to the person from whom she bought the food equipment, and $100 owed to the state for sales taxes that. These are the assets of Smith's Gourmet Foods and they are shown on a balance sheet as follows: Cash + Accounts owed to it + Inventory + Equipment = Total Assets $ 500.00 $ 70.00 $ 200.00 $ 1,300.00as the following assets: Smith has $500 in a bank account, is owed $70.00 by customers who pay for their food monthly, has $200 worth of food supplies, and owns food preparation equipment worth $1,300ess were paid off. Owner's equity is the figure that is adjusted to make the equation of assets and liabilities balance. Let's look at a simple example: a basic sales business. Smith's Gourmet Foods hges or long-term business loans. Owner's equity is whatever is left after debts are deducted from assets. Thus, the owner's equity is what the owner would have left after all of the debts of the busin This includes accounts payable (remember, money that the business intends to pay; basically, bills the business owes), and taxes that are due. Long-term liabilities are long-term debts such as mortgae broken down into three groups: current liabilities, long-term liabilities, and owner's equity. Current liabilities are short-term debts, generally those that a business must pay off within one year.Understanding Financial Record Keeping 2 assets are more permanent-type assets and include vehicles, equipment, machinery, land, and buildings owned by the business. The liabilities of a business arthat the business intends to receive; basically, bills owed to the business), and inventory. Current assets are generally considered anything that could be converted into cash within one year. Fixed d format. On a balance sheet, the assets of a business are generally broken down into two groups: current assets and fixed assets. Current assets consist of cash, accounts receivable (remember, money ed a balance sheet. A balance sheet is usually prepared on the last day of a month, quarter, or year. A balance sheet simply lists the amounts of the business's assets and liabilities in a standardizeA basic tenet of record keeping is that both sides of this financial equation must always be equal. The formal statement of the assets and liabilities of a specific business on a specific date is call expanded to read: Assets = Debts + Equity Rearranging the equation can provide a simple explanation of how to arrive at the value of a business to the owner, or its equity: Equity = Assets - Debts ce, it is this equation that is in balance: the assets of a business must equal the liabilities of a business. Since the liabilities of a business consist of both equity and debts, the equation can beionship between assets and liabilities can be shown in a simple equation: Assets = Liabilities This simple equation is the basis of business accounting. When the books of a business are said to balan corporation, the owner's equity is called the capital surplus or retained capital. All of the debts of a business and its equity are together referred to as the business' liabilities. The basic relat left over if all of the debts of the business were paid off. If it is a partnership or a sole proprietorship, the business equity is referred to as the net worth of the business. If the business is apay. In addition to money owed to others, the equity of a business is also considered a liability. The equity of a business is the value of the ownership of the business. It is the value that would beonsist of any shortterm debts, such as money owed for supplies or taxes. Money that a business owes to others is called its accounts payable, basically the money that the business hopes to eventually the business's assets. The liabilities of a business are anything that the business owes to others. These consist of longterm debts, such as a mortgage on real estate or a long-term loan. They also ccalled Understanding Financial Record Keeping 1 its accounts receivable, basically the money that the business hopes to eventually receive. The total of all of these things that a business owns arehey can be inventory, or material that will be sold to customers; they can be real estate, buildings, and land; and they can be money that is owed to the business. Money that is owed to a business is ets. The assets of a business are anything that the business owns. These can be cash on hand or in a bank account; they can be personal property, like office equipment, vehicles, tools, or supplies; tsks that a small business owner must confront is keeping track of what the business owns and owes. Before the business buys or sells anything or makes a profit or loss, the business must have some assl financial document used to view this aspect of a business. It provides this information by laying out the value of the assets and the liabilities of a business. One of the most critical financial taint in time. If the business owns more than it owes, it is in good shape financially. On the other hand, if it owes more than it owns, the business may be in trouble. The balance sheet is the universaok at what the business owns and owes on a specific date. By seeing what a business owns and owes, anyone looking at a balance sheet can tell the relative financial position of the business at that po are two standard reports that are the main sources of business financial information: the balance sheet and the profit-and-loss statement. The Balance Sheet The purpose of the balance sheet is to lo a wide range of business transactions. In order to understand what a record keeping system is trying to accomplish, it is necessary to define some of the standard ways of looking at a business. There to allow the business owner to easily understand and use the information gathered. Certain accounting principles and terms have been adopted as standard over the years to make it easier to understandformation that is gathered and put into the system. Bookkeeping is the actual inputing of the financial information into the record keeping system. The purpose of any business record keeping system isunting. First, let's get some of the terminology clarified. Accounting is the design of the record keeping system that a business uses and the preparation and interpretation of reports based on the indamental ideas of accounting is necessary. For those unfamiliar with the terms and concepts of accounting, grasping these basic ideas may be the most difficult part of accounting, even simplified accounderstandable, and accurate business records are vital to the success of any small business. In order to design a good record keeping system for a particular business, an understanding of certain fund record keeping system. Business owners also need to be able to produce accurate financial statements for income tax purposes, for loan proposals, and for the purpose of selling the business. Clear, are making a profit, why they are making a profit, which parts of the business are profitable and which are not. This information is only available if the business owner has a clear and straightforwar financial record keeping system is to provide a clear vision of the relative health of the business, both on a day-to-day basis and periodically. Business owners themselves need to know whether they e or otherwise) arising in any way out of the use of these materials. An attorney should be consulted for all serious legal matters. Understanding Financial Record Keeping The purpose of any businessubstitute goods or services; loss of use, data, or profits; or business interruption) however caused and on any theory of liability, whether in contract, strict liability, or tort (including negligencviders, authors or publishers of the forms, be responsible or liable for any direct, indirect, incidental, special, exemplary, or consequential damages (including, but not limited to, procurement of s completeness for any of the materials for your particular needs. The materials are used at your own risk. In no event will: i) FindLegalForms, Inc, its agents, partners, or affiliates, or ii) the pro is subject to the "Disclaimers and Terms of Use" found at findlegalforms.com. These materials are provided "AS-IS." We do not give any express or implied warranties of merchantability, suitability orl Record Keeping Checklist Disclaimer No Attorney-Client relationship is created by use of these materials. FindLegalForms, Inc. does not provide legal advice. The purchase and use of these materialsy, actually understand those records. Included in this kit are the following: · · · · Understanding Financial Records Guide Current Balance Sheet Form Estimated Profit and Loss Statement Form Financiasucceeding. This kit is designed to aid you in understanding how to develop a concise and easily understood financial record keeping system, keep the books for a business, and, perhaps most importantlom the direct control and, therefore, understanding of the business owners themselves. If business owners cannot understand the financial situation of their own businesses, they have little chance of business owners to understand the complex accounting processes and systems that have become relatively standard in modern business. Accounting and bookkeeping have, in most businesses, been removed frnting and bookkeeping principles. Each year, thousands of small businesses fail because their owners have lost control of their finances. Many of these failures are brought on by the inability of the Information Financial Record Keeping - Kit Provided under agreement with copyright holder, © Nova Publishing Company 2004 This kit provides the background and guidelines for understanding basic accound Tax Statements. Payroll Checklist orm 940 or 940-EZ: Employer's Annual Federal Unemployment Tax Return (FUTA). Annually, prepare and file IRS Form W-2: Wage and Tax Statement for each employee, and IRS Form W-3: Transmittal of Wage all tax liability is more than $500 per quarter. Quarterly using IRS Form 941: Employer's Quarterly Federal Tax Return, if your payroll tax liability is less than $500 per quarter. Annually, file IRS Ftaxes in your payroll tax bank account. Fill in Payroll Depository Record and Annual Payroll Summary Pay payroll taxes: ? ? ? ? Monthly using IRS Form 8109: Federal Tax Deposit Coupon, if your payromation on any applicable state or local taxes. List Federal withholding, Social Security, Medicare, and any state or local deductions on Employee Payroll Record. Pay employees and deposit appropriate rterly Payroll Time Sheet for employees. Open separate business Payroll Tax Bank Account. Consult IRS Circular E: Employer's Tax Guide and use tables to determine withholding tax amounts. Obtain inforloyer Identification Number and obtain Federal Employer Identification Number. Obtain IRS Form W-4: Employee's Withholding Allowance Certificate for each employee. Set up Employee Payroll Record & Quater Total October November December 4th Quarter Total Yearly TOTAL Gross Fed. SS MC State Net Setting Up Your Payroll 9 Payroll Checklist ? ? ? ? ? ? ? ? ? ? File IRS Form SS-4: Application for Empounts to determine your annual costs. Setting Up Your Payroll 8 ANNUAL PAYROLL SUMMARY Month January February March 1st Quarter Total April May June 2nd Quarter Total July August September 3rd Quartheir individual Employee Payroll Records and transfer these totals to this form. 4. On a quarterly basis, total the columns to determine your quarterly payroll costs. Annually, total the quarterly amform. Recall that SS refers to Social Security, MC refers to Medicare, EE refers to Employee, and ER refers to Employer. 3. For each month, total all of your employees' gross and net pay amounts from h month, total the columns on your Payroll Depository for SS/EE and SS/ER and also for MC/EE and MC/ER. You will then simply need to transfer the totals for Social Security and Medicare taxes to this a quarterly and annual basis. Follow these directions to prepare this form: 1. For each month, transfer the amounts for Federal withholding from the Payroll Depository Record to this form. 2. For eacprovide you with a record of all of your payroll costs, including the payroll deduction costs. This form will be useful for both tax and planning purposes as you examine your business profitability ona monthly, quarterly, and annual basis. Much of the information on this form is similar to the information that you compiled for the Payroll Depository Record. However, the purpose of this form is to id: Total Wages Paid: Total Wages Paid: Total Wages Paid: Setting Up Your Payroll 7 Annual Payroll Summary The final payroll form is used to total all of the payroll amounts for all employees on ber of Employees: October November December 4th Quarter 4th Quarter Total Number of Employees: Yearly TOTAL Yearly Total Number of Employees: SS/ER MC/EE MC/ER Total Total Wages Paid: Total Wages PaS/EE January February March 1st Quarter 1st Quarter Total Number of Employees: April May June 2nd Quarter 2nd Quarter Total Number of Employees: July August September 3rd Quarter 3rd Quarter Total Numl Tax Return. On a yearly basis, total all of the quarterly columns to arrive at your total annual Federal payroll tax liability. Setting Up Your Payroll 6 PAYROLL DEPOSITORY RECORD Month Fed W/H Sal Tax Deposit Coupon. 6. If you must file only quarterly, total all three of your monthly amounts on a quarterly basis and pay this amount when you file your IRS Form 941: Employer's Quarterly Federaductions for the month. This is the amount of your total monthly Federal payroll tax liability. If necessary, write a check to your local bank for this amount and deposit it using IRS Form 8109: Federve entered in the SS/EE and MC/EE columns. The employer's share of Social Security and Medicare is the same as the employee's share, but is not deducted from the employee's pay. 5. Total all of the dell Depository Record. Note that SS/EE refers to Social Security/Employee's Share and that MC/EE refers to Medicare/Employee's Share. 4. Enter identical amounts in the SS/ER and MC/ER columns as you hapriate column on the Payroll Depository Record. 3. Total Social Security and Medicare taxes for all of your employees for the entire month and enter this figure in the appropriate columns on the Payromployee's Federal withholding tax, Social Security tax, and Medicare tax for the month. 2. Total all of the Federal withholding taxes for all employees for the month and enter this figure in the appro tax liability, use the Payroll Depository Record following these instructions: 1. On a monthly basis, total each column on all of your Employee Payroll Records. This will give you a figure for each e. If your payroll tax liability is more than $500 per quarter, you must deposit your payroll taxes on a monthly basis with a bank using IRS Form 8109: Federal Tax Deposit Coupon. To track your payrollan accountant). If your employment taxes total less than $500 per quarter, you may pay your payroll tax liability when you quarterly file your Federal Form 941: Employer's Quarterly Federal Tax Return required to deposit taxes with the IRS on a monthly or quarterly basis (unless your total employment taxes totaled more than $50,000 for the previous year, in which case you should obviously consult #: Number of Exemptions: Rate of Pay: Overtime: Pay Period: Gross Fed. SS MC State Date Chk # Period Hours OT Net Period TOTAL Setting Up Your Payroll 5 Payroll Depository Record You will bef these taxes. The employer's share of Social Security and Medicare taxes is equal to the employee's share. Setting Up Your Payroll 4 EMPLOYEE PAYROLL RECORD Employee Name: Address: Social Securitys sheet. Also prepare a check to your payroll tax bank account for a total of the Federal withholding amount and two times the Social Security and Medicare amounts. This includes your employer share of the deductions from the employee's gross wages to determine the employee's net pay. Enter this figure in the final column and prepare the employee's paycheck using the deduction information from thihe Social Security deduction would be $380 x .062 = $23.56 and the Medicare deduction would be $380 x .0145 = $5.51. 5. Determine any state taxes and enter in the appropriate column. 6. Subtract all oe is 6.2 percent and the employee's Medicare share rate is 1.45 percent. Multiply these rates times the employee's gross wages and enter the figures in the appropriate places. For example: for $380, t IRS Circular E: Employer's Tax Guide. Enter this figure on the form. 4. Determine the employee's share of Social Security and Medicare deductions. As of 2000, the employee's Social Security share rate wage rate of $12.00/hour = $60.00. Gross pay for the period is $320 + $60.00 = $380. 3. Determine the Federal withholding tax deduction for the pay amount by consulting the withholding tax tables inuarterly Payroll Time Sheet. Multiply this amount by the employee's wage rate to determine the gross pay. For example: 40 hours at the regular wage of $8.00/hour = $320; plus five hours at the overtime on Form W-4 · Regular and overtime wage rates · Pay period (ie. weekly, biweekly, monthly, etc.) 2. For each pay period, fill in the number of regular and overtime hours worked from the employee's Qnformation. 1. For each employee, fill in the following information at the top of the form: · Name and address of employee · Employee's Social Security number · Number of exemptions claimed by employeLL TIME SHEET Employee: Week of Sun Mon Tue Wed Thu Fri Sat Reg OT Total Quarterly TOTAL Setting Up Your Payroll 3 Employee Payroll Record You will use this form to track each employee's payroll iour individual Employee Payroll Record in order to calculate the employee's paycheck amounts. This is explained following the Quarterly Payroll Time Sheet. Setting Up Your Payroll 2 QUARTERLY PAYROowing information: · Number of hours worked (daily, weekly, and quarterly) · Number of regular and overtime hours worked The information from this Quarterly Payroll Time Sheet will be transferred to yerly Payroll Time Sheet. If your employees are paid an hourly wage, you will prepare a sheet like this for each employee for each quarter during the year. On this sheet you will keep track of the follpaid. In many jurisdictions, these requirements are tailored after the Federal requirements and the procedures and due dates are similar. Quarterly Payroll Time Sheet On the following page is a Quarteach employee · File IRS Form W-3: Transmittal of Wage and Tax Statements Remember that your state and local tax authorities will generally have additional requirements and taxes that will need to be pay, but you will still need to file these forms quarterly. 10. Finally, to complete your payroll, at the end of the year you must do the following: · Prepare IRS Form W-2: Wage and Tax Statement for s pay. Also on a quarterly basis, you will need to file IRS Form 941: Employer's Quarterly Federal Tax Return. If you have made monthly deposits of your taxes due, there will be no quarterly taxes to yment Tax, using IRS Form 940 or IRS Form 940-EZ: Employer's Annual Federal Unemployment Tax Return (FUTA). This tax is solely the responsibility of the employer and is not deducted from the employee' basis when you file IRS Form 941: Employer's Quarterly Federal Tax Return. Setting Up Your Payroll 1 9. On a quarterly or annual basis, you will also need to make a tax payment for Federal Unemplo of taxes due with the Federal government. This is done either by making a monthly payment for the taxes due to your bank with IRS Form 8109: Tax Deposit Coupon or by making the payment on a quarterly then also calculate your employer share of Social Security and Medicare taxes. Each month (or quarter if your tax liability is less than $500 per quarter), you will need to deposit the correct amountth, you will need to transfer the information regarding employee deductions to your Payroll Depository Record and Annual Payroll Summary. Copies of these forms are included later in this kit. You willns and for the total amount of any employer's share of taxes. You will then deposit this check into your business payroll tax bank account, that you set up in Item #5 above. 8. At the end of every monon on the Employee's Payroll Record. 7. When you have completed paying all of your employees for the pay period, you will write a separate check for the total amount of all of your employees' deductioy deposit all taxes due into this separate account and help prevent the lack of sufficient money available when the taxes are due. 6. Next you will pay your employee and record the deduction informatifor each pay period. 5. Before you pay your employee, you should open a separate business bank account for handling your business payroll tax deductions and payments. This will allow you to immediateleductions for each employee for each pay period. If your employees are paid on an hourly basis and the number of hours worked is different each pay period, you will have to perform these calculations eet as explained later in this kit. 4. You will then need to consult the tables in IRS Circular E: Employer's Tax Guide. From the tables in this publication, you will be able to determine the proper do prepare your payroll. 3. You must then determine the gross salary or wage that each employee will earn. For each employee, complete an Employee Payroll Record and prepare a Quarterly Payroll Time Sh2. Next, each employee must fill in an IRS Form W-4: Employee's Withholding Allowance Certificate. This will provide you with the necessary information regarding withholding allowances to enable you t business with the Federal government as an employer. This form and instructions (as well as all other IRS forms referred to in this kit) can be downloaded at http://www.irs.gov/formspubs/index.html. us legal matters. Setting Up Your Payroll 1. The first step in becoming an employer is to file IRS Form SS-4: Application for Employer Identification Number (FEIN). This will officially register yourory of liability, whether in contract, strict liability, or tort (including negligence or otherwise) arising in any way out of the use of these materials. An attorney should be consulted for all serio exemplary, or consequential damages (including, but not limited to, procurement of substitute goods or services; loss of use, data, or profits; or business interruption) however caused and on any theent will: i) FindLegalForms, Inc, its agents, partners, or affiliates, or ii) the providers, authors or publishers of the forms, be responsible or liable for any direct, indirect, incidental, special," We do not give any express or implied warranties of merchantability, suitability or completeness for any of the materials for your particular needs. The materials are used at your own risk. In no evgalForms, Inc. does not provide legal advice. The purchase and use of these materials is subject to the "Disclaimers and Terms of Use" found at findlegalforms.com. These materials are provided "AS-IS.· Employee Payroll Record Form · Payroll Depository Record Form · Annual Payroll Record Form · Payroll Checklist Disclaimer No Attorney-Client relationship is created by use of these materials. FindLedditional payroll tax, state unemployment insurance, or workers' compensation requirements. Included in this kit are the following: · Setting Up Your Payroll Notes · Quarterly Payroll Time Sheet Form as an employer. The following information contains only the instructions for meeting Federal requirements. Please check with your particular state and local governments for information regarding any ato make payroll tax deposits, file various quarterly payroll tax returns and make additional end-of-the-year reports. Initially, you must take certain steps to set up your payroll and official status the employer. You and any other people that you hire will be the employees. A business payroll entails a great deal of paperwork and has numerous government tax filing deadlines. You will be required s examine the basics. If your business is a corporation, all pay must be handled as payroll, even if you are the only employee. The corporation is a separate entity and the corporation itself will be myriad government forms that must be prepared, the handling of a business payroll often causes accounting nightmares. Even if there is only one employee, there is a potential for problems. First, let'payroll. One of the most difficult and complex accounting functions that small businesses face is their payroll. Because of the various state and Federal taxes that must be applied and because of the Information Business Payroll - Kit Provided under agreement with copyright holder, © Nova Publishing Company 2004 This kit provides tools and guidelines for setting up and maintaining your company's e your Invoice # on your check. 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