Business Payroll Kit

for Your State

This Business Payroll Kit provides tools and guidelines for setting up and operating your company’s payroll. This kit is for use in all states and is available for immediate download.

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This Business Payroll Kit contains useful forms and guidelines for setting up and maintaining your payroll system. There are a myriad of government forms that must be prepared and filed in a timely manner. As an employer you are also required to make payroll tax deposits and file various quarterly tax reports. Whether you have numerous employees or just one, this Business Payroll Kit will help in keeping your payroll system running smoothly.

This Business Payroll Kit includes the following:
  • Setting Up Your Payroll
  • Quarterly Payroll Time Sheet
  • Employee Payroll Record
  • Payroll Depository Record
  • Annual Payroll Summary
  • Payroll Checklist

Protect yourself and your business by using our professionally prepared up-to-date forms.

This attorney-prepared packet contains:
  1. General Information
  2. Business Payroll Kit
State Law Compliance: This form complies with the laws of all states
Number of Pages11
DimensionsDesigned for Letter Size (8.5" x 11")
EditableYes (.doc, .wpd and .rtf)
UsageUnlimited number of prints
Product number#27302
This is the content of the form and is provided for your convenience. It is not necessarily what the actual form looks like and does not include the information, instructions and other materials that come with the form you would purchase. An actual sample can also be viewed by clicking on the "Sample Form" near the top left of this page.












Business Payroll Kit








This Packet Includes:
1. General Information
2. Setting Up Your Payroll Notes
3. Quarterly Payroll Time Sheet Form
4. Employee Payroll Record Form
5. Payroll Depository Record Form
6. Annual Payroll Record Form


7. Payroll Checklist


General Information
Business Payroll - Kit

This kit provides tools and guidelines for setting up and maintaining your companys 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 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, lets 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 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 to 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 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 additional payroll tax, state unemployment insurance, or workers compensation requirements.






DISCLAIMER:

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Setting Up Your Payroll
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 your 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.

2.   Next, each employee must fill in an IRS Form W-4: Employees Withholding Allowance Certificate.  This will provide you with the necessary information regarding withholding allowances to enable you to 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 Sheet as explained later in this kit.

4.   You will then need to consult the tables in IRS Circular E: Employers Tax Guide.  From the tables in this publication, you will be able to determine the proper deductions 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 for 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 immediately 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 information on the Employees 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 deductions and for the total amount of any employers 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 month, 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 will 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 amount 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 basis when you file IRS Form 941: Employers Quarterly Federal Tax Return.

9.   On a quarterly or annual basis, you will also need to make a tax payment for Federal Unemployment Tax, using IRS Form 940 or IRS Form 940-EZ: Employers Annual Federal Unemployment Tax Return (FUTA).  This tax is solely the responsibility of the employer and is not deducted from the employees pay.  Also on a quarterly basis, you will need to file IRS Form 941: Employers Quarterly Federal Tax Return.  If you have made monthly deposits of your taxes due, there will be no quarterly taxes to 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 each 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 paid.  In many jurisdictions, these requirements are tailored after the Federal requirements and the procedures and due dates are similar.


Quarterly Payroll Time SheetQuarterly Payroll Time Sheet
On the following page is a Quarterly 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 following 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 your individual Employee Payroll Record in order to calculate the employees paycheck amounts.  This is explained following the Quarterly Payroll Time Sheet.


QUARTERLY PAYROLL TIME SHEET

  Employee:
  Week of
Sun
Mon
Tue
Wed
Thu
Fri
Sat
Reg
OT
Total





































































































































































Quarterly TOTAL











Employee Payroll RecordEmployee Payroll Record
You will use this form to track each employees payroll information.

1.   For each employee, fill in the following information at the top of the form:
   Name and address of employee
   Employees Social Security number
   Number of exemptions claimed by employee 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 employees Quarterly Payroll Time Sheet.  Multiply this amount by the employees 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 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 in IRS Circular E: Employers Tax Guide.  Enter this figure on the form.

4.   Determine the employees share of Social Security and Medicare deductions.  As of 2000, the employees Social Security share rate is 6.2 percent and the employees Medicare share rate is 1.45 percent.  Multiply these rates times the employees gross wages and enter the figures in the appropriate places.  For example: for $380, the 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 of the deductions from the employees gross wages to determine the employees net pay.  Enter this figure in the final column and prepare the employees paycheck using the deduction information from this 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 these taxes.  The employers share of Social Security and Medicare taxes is equal to the employees share.


EMPLOYEE PAYROLL RECORD

  Employee Name:                                                        Social Security #:
  Address:                                                                     Number of Exemptions:
                                                                                     Rate of Pay:             Overtime:
                                                                                     Pay Period:
Date
Ck #
Period
Hours
OT
Gross
Fed.
SS
MC
State
Net
































































































































































































































































































































































































































































































































































Period TOTAL
















Payroll Depository RecordPayroll Depository Record
You will be 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 an 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: Employers Quarterly Federal Tax Return.  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 payroll 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 employees 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 appropriate 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 Payroll Depository Record.  Note that SS/EE refers to Social Security/Employees Share and that MC/EE refers to Medicare/Employees Share.

4.   Enter identical amounts in the SS/ER and MC/ER columns as you have entered in the SS/EE and MC/EE columns.  The employers share of Social Security and Medicare is the same as the employees share, but is not deducted from the employees pay.

5.   Total all of the deductions 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: Federal 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: Employers Quarterly Federal Tax Return.  On a yearly basis, total all of the quarterly columns to arrive at your total annual Federal payroll tax liability.


PAYROLL DEPOSITORY RECORD

Month
Fed W/H
SS/EE
SS/ER
MC/EE
MC/ER
Total
January












February












March












1st Quarter












1st Quarter Total Number of Employees:                              Total Wages Paid:
April












May












June












2nd Quarter












2nd Quarter Total Number of Employees:                             Total Wages Paid:
July












August












September












3rd Quarter












3rd Quarter Total Number of Employees:                             Total Wages Paid:
October












November












December












4th Quarter












4th Quarter Total Number of Employees:                             Total Wages Paid:
Yearly TOTAL












Yearly Total Number of Employees:                                   Total Wages Paid:

Annual Payroll SummaryAnnual Payroll Summary
The final payroll form is used to total all of the payroll amounts for all employees on a 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 provide 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 on 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 each 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 form.  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 their 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 amounts to determine your annual costs.


ANNUAL PAYROLL SUMMARY

Month
Gross
Fed.
SS
MC
State
Net
January












February












March












1st Quarter Total












April












May












June












2nd Quarter Total












July












August












September












3rd Quarter Total












October












November












December












4th Quarter Total












Yearly TOTAL















Payroll Checklist

?   File IRS Form SS-4:  Application for Employer Identification Number and obtain Federal Employer Identification Number.

?   Obtain IRS Form W-4:  Employees Withholding Allowance Certificate for each employee.

?   Set up Employee Payroll Record & Quarterly Payroll Time Sheet for employees.

?   Open separate business Payroll Tax Bank Account.

?   Consult IRS Circular E:  Employers Tax Guide and use tables to determine withholding tax amounts.

?   Obtain information 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 taxes 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 payroll tax liability is more than $500 per quarter.

?   Quarterly using IRS Form 941:  Employers Quarterly Federal Tax Return, if your payroll tax liability is less than $500 per quarter.

?   Annually, file IRS Form 940 or 940-EZ:  Employers 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 and Tax Statements.
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