Entrepreneurs, let's consider this scenario. Your business has expanded quicker than you expected and payroll needs to be processed in the next two business days. As the owner and key responsible for the processing of payroll, you have been faced with a proposal deadline that you cannot miss. What do you do without a trained back-up person? Ideally, you will immediately contact Fontenot & Associates Solutions LLC to schedule your FREE consultation to develop an extensive procedure guide to ensure situation never occurs again. Realistically, as the owner you going to work day and night to get both jobs done on time.
The business process should include a section related to "deductions from employee earnings" which outlines which deductions are allowed and the proper way to set those up for processing. The total earning of an employee for a payroll period, including any overtime pay, are called gross pay. From this amount is subtracted one or more deductions to arrive at the net pay. The deductions normally include federal, state, local income taxes, medical insurance, and pension contributions. A key and critical deduction employers are responsible for is income taxes. Employers normally withheld a portion of employee earnings for payment of the employees' federal income tax. Each employee authorizes the amount to be withheld by completing an "Employee's Withholding Allowance Certificate,"called a W-4. This is the form every employee receives when they start a new job with an employer. A blank form that many people may not understand completely what it means and the importance of it - especially our young college graduates and young entrepreneurs.
A question that remains for many employees, is what do the allowances mean and how do allowances work?
A simple answer is: The number of allowances you claim controls how much will be withheld from your paycheck. The more you claim, the less money is withheld; the fewer, the more of your salary is sent off to the IRS. If you are a single (not married) individual with no dependents (no children) your completed W-4 form may be similar to the example below.
The completion of this worksheet shows Carlie will claim "2" exemptions, mainly because the first questions says you can claim "1" if no one else can claim you as a dependent. This is key for college students who have their own job but the parents are still claiming them as an exemption on their tax return because they qualify. Quick note, if your parents can still claim you on their tax return, the first question "A" should be zero.
As an employer, you may also be required to withhold state or city income taxes. The amounts to be withheld are determined on state-by-state and city-by-city bases. Fontenot & Associates Solutions LLC, has the knowledge and skills to develop an extensive guide for employers and their staff to ensure forms such as this are in compliance.
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