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nd 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. 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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