![]() ![]() Thus, her total withholdings would be $215.Īgain, it’s a good idea to use a spreadsheet to record the totals for each employee, as it makes calculating and remembering much easier. Jane, for instance, might pay $130 in federal taxes, $15 in social security, and $40 in state taxes, in addition to $30 in 401(k). ![]() ![]() Other benefits, such as company-subsidized health insurance.When determining withholding amounts, you’ll need to refer to your employees’ tax forms, and be sure they filled them out correctly. Payroll deductions, which are specified by the employee on their tax returns, are amounts that can be deducted from taxable income. Allowances are specified on the employee’s W-4. These calculations can be easily done in a spreadsheet, which should then be kept in your records in case any pay disputes arise.Įxemptions are the same as allowances - both refer to money taken out of an employee’s paycheck. So if Jane worked 10 overtime hours at $22.50 ($15 x 1.5), she would be owed (10 x 22.5) $225.Īdding in her normal hours, Jane’s total gross pay for that week would be $600 + $225 = $825. To calculate overtime pay, take the number of hours worked over 40 and multiply it by their hourly overtime pay rate, 1.5. Employees choosing the time-off option cannot accumulate more than 240 hours, except for those working in public safety, emergency response, and seasonal jobs – who are able to accumulate 480 hours. If you fail to pay employees the correct overtime rate, your business could face serious fines and other penalties, including paying back wages to correct the payroll error.Įmployees can also choose to receive their overtime pay in the form of compensatory time off at 1.5 hours for each hour of overtime. Keep in mind that in Texas, the overtime law dictates that any hours over 40 in a week must be paid at one and a half times their regular pay rate. ![]() Then simply multiply their hours for that week, or month, by their hourly rate.įor example, if Jane works 40 hours in a week at $15 per hour, her gross pay (40 x 15) is $600. For hourly employees, calculating gross pay is easy.įirst, review their timesheets to make sure they have accurately tracked their hours. If you have salaried employees, gross pay is simply their contracted fixed pay amount, such as $2,000 per week. Your municipality may also require certain tax registrations, so check with your local government for requirements. Texas has no state income tax, but employers must register with the Texas Workforce Commission to pay state unemployment taxes ( SUTA). The EIN will never expire and is never duplicated, even if you go out of business. The application is form SS-4, and it can be printed out and mailed to the IRS, or submitted electronically. Once your information on the application has been validated, your EIN is assigned immediately. The application is free and can be found on the IRS website. The EIN also contains information about the state in which the company is registered.Įmployers use their EIN to file taxes, so in order to process payroll and ensure the proper withholdings and tax payments, you’ll need to first obtain your EIN. It is also known as a Federal Tax Identification Number (FTIN), or sometimes for corporations just Tax Identification Number (TIN).Īn EIN is used to identify US businesses and the taxpayers required to file the relevant tax returns. Your Employer Identification Number, or EIN, is like a social security number for your company, enabling the IRS to identify your business. ![]()
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