Part One of the Sheer Money™ Series: Accounting for Payroll
By Luke Adams

Studies show that nearly 70% of all small companies are one-person businesses. With such staggering statistics, discussing payroll for these businesses seems appropriate.

There are major tax advantages to operating a small business. Unfortunately, some entrepreneurs take advantage of this and abuse these privileges. Because of this fraud, small business owners have been and continue to be under the watchful eye of the IRS. If payroll taxes are not filed properly and paid on time, fees and penalties are quickly assessed to the company that made the mistake or missed the deadline. Currently, there are no breaks for small businesses. A start-up, one-person company has the same payroll tax responsibilities as a multi-million dollar corporation staffed with 250 employees.

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Part Two of the Sheer Money™ Series: Accounting for Payroll
By Luke Adams

Some studies have shown that a little over one third of a small business owner’s time is wasted on HR issues, including payroll. Adding payroll to an entrepreneur’s plate can cause other areas of the business to become neglected. In order to effectively save time and money, many small businesses have discovered the benefits of outsourcing their payroll.

The IRS has reported that nearly forty percent of the small businesses that perform their own payroll are fined for inaccurate returns. The average fine is $845. When considering the minimal cost of outsourcing this HR function, these fees are astronomical and avoidable.

There are literally hundreds of reasons why outsourcing your payroll makes more sense than using up in-house resources. Here are five that you should think about for improving your business.

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Part Three of the Sheer Money™ Series: Accounting for Payroll
By Luke Adams

When it comes to taxes, the US and state tax agencies make filing as complex as possible. Payroll taxes are no exception. In most cases, they’re a nightmare. The basics of payroll taxes have been outlined here so that you can have a better understanding of what is required from both employers and employees when it comes to preparing payroll.

Employers in the USA are required to withhold certain taxes from their employees’ paychecks. These taxes include Federal Income, State Income (where applicable), Social Security and Medicare. In addition to these three withheld taxes, Federal and State Unemployment taxes are required to be paid, and unfortunately for the employer are borne exclusively by them.

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Part Four of the Sheer Money™ Series: Accounting for Payroll
By Luke Adams

On occasion, a company receives garnishment notices from courts, tax agencies or a number of other third-party agencies. These garnishment notices are an attempt at collecting on a financial obligation for one of the company’s employees, such as child support, a tax bill and sometimes a credit payment.

Tracking, processing and paying garnishments are some of the most labor-intensive tasks for any payroll department to handle. Here are some tips on how to better handle the garnishment requests you receive. Take them seriously. Garnishments are usually very time sensitive and could lead to fees and penalties for the company if they aren’t managed properly.

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Part Five of the Sheer Money™ Series: Accounting for Payroll
By Luke Adams

When someone is paid as a W-2 employee, the employer withholds and pays certain taxes. The employer must also match some of these taxes that are being paid, which is an additional expense for the employer. When someone is paid as a 1099 independent contractor instead of as a W-2 employee, all money earned by the individual is paid without tax withholdings. It becomes the full responsibility of the individual to file and pay the appropriate taxes. Independent contractors usually have to pay for their own health insurance and other benefits, such as retirement. It’s also important to understand that independent contractors are not protected by minimum wage laws.

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