- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Just hired my first employee, employer tax question?
Posted on 10/16/16 at 8:14 pm
Posted on 10/16/16 at 8:14 pm
just hired my first employee, and it came time to pay him, 1 weeks pay, part time $220 gross and was charged a little over 40 dollars in employers taxes. seems kinda steep is that based off a percentage, or a flat rate per employee?
5
Posted on 10/16/16 at 8:37 pm to gsvar2004
1099 the employees
Posted on 10/16/16 at 8:38 pm to Paul Allen
I had it that way, cpa talked me into w2. I had this guy as 1099 for about a year.
Posted on 10/16/16 at 9:27 pm to gsvar2004
quote:
just hired my first employee, and it came time to pay him
Congrats, it sounds like you want to do it right. Doesn't matter how small it is.
quote:
part time $220 gross and was charged a little over 40 dollars in employers taxes. seems kinda steep
Welcome to the wonderful world of being responsible for other people's taxes. That's just under 20% and is actually not bad at all.
You should probably just have him as a 1099 contractor.
Posted on 10/16/16 at 9:41 pm to foshizzle
So that puts me paying 20% just to pay him and have him as an employee? So it just cost me 360 to pay him 220 after workers comp, employers taxes, and payroll company. Man that's awful. Looking like we will be going the 1099 route again.
Posted on 10/17/16 at 1:23 am to Paul Allen
quote:
1099 the employees
Then they aren't employees. He also has to pass the test. You can't just 1099 people unless it meets certain criteria.
Posted on 10/17/16 at 7:17 am to gsvar2004
What is the breakdown?
Posted on 10/17/16 at 8:55 am to gsvar2004
quote:
. Looking like we will be going the 1099 route again.
well is he an employee or an independent contractor?
Posted on 10/17/16 at 9:11 am to BilJ
quote:
well is he an employee or an independent contractor?
Exactly. You can't just make someone a 1099 contractor. They have to pass the litmus test.
quote:
There is no such thing as a “1099 employee.” The “1099” part of the name refers to the fact that independent contractors receive a form 1099 at the end of the year, which reports to the IRS how much money was paid to the contractor. In contrast, employees receive a W-2.1 Service providers are either employees or independent contractors; they cannot be both. Often a company may choose to designate certain service providers to be independent contractors instead of employees, but this is not always up to the parties to decide. In many situations, workers who are deemed to be independent contractors by agreement between the company and the worker are still considered to be employees by law. When that happens, the IRS, the department of labor, and state agencies, will reclassify the worker to be an employee and treat the employer as if it simply violated its legal obligations in how it handled that employee. As a result, the consequences for misclassifying a worker can be quite severe.
How do you correctly decide whether a worker can be considered an independent contractor and when they must be considered an employee? The IRS has published guidelines on making this determination based on three sets of factors: behavioral control factors, financial control factors, and relationship control factors. [1] Examples of each are:
Behavioral Control Factors
Does the worker decide their own schedule and location of work?
Is the company providing training to the worker?
Does the worker have their own employees?
Does the worker decide the order and sequence of services?
Does the worker decide what kind of reporting is provided to the company?
Financial Control Factors
Will the worker submit invoices?
Will the worker pay their own business and travel expenses?
Does the worker furnish his own tools and materials
Does the worker have his own business?
Does the worker advertise their services?
Will the worker recognize profit or loss based on good or bad decisions?
Relationship Factors
Is the worker retained for a specific project or are they involved in ongoing operations?
Does the worker have other clients?
Will the worker maintain independent activities?
Does the worker maintain his own insurance?
Is there a signed contract between the worker and the company specifying that they have an independent contractor relationship?
Does the worker receive benefits?
Is the relationship temporary or open-ended?
Are the services provided a key aspect of the regular business of the company?
This post was edited on 10/17/16 at 9:13 am
Posted on 10/17/16 at 11:23 am to gsvar2004
It's been a while since I've figured payroll for someone, but that's pretty steep. You should have paid 6.2% for Social Security ($13.64), 1.45% for Medicare ($3.19), either .8% or .6% for Federal Unemployment ($1.76), and then whatever your state unemployment rate is. That would total up to $18.59 meaning state unemployment would have to be over 10% to make up the difference.
Do you mean that the total payroll tax deposit was over $40? Because that would make more sense.
Do you mean that the total payroll tax deposit was over $40? Because that would make more sense.
Posted on 10/17/16 at 11:27 am to gsvar2004
1099 until you have more income. Payroll taxes suck.
I actually charge myself payroll tax to pay myself. BUT it makes reporting a steady wage easier.
It's a percentage, I forgot the actual percentage off hand.
Hmm $40 seems high, my tax calculator says $16.83 is what you should have paid.
Unless you have high unemployment tax.
I am lucky that I can 1099 and pass "the litmus test"
I do miss being a new company that paid under the table.
Those were the days.
I actually charge myself payroll tax to pay myself. BUT it makes reporting a steady wage easier.
It's a percentage, I forgot the actual percentage off hand.
quote:
You must withhold these amounts from an employee's wages. The law also requires you to pay the employer's portion of two of these taxes: a 6.2 percent Social Security tax; and. a 1.45 percent Medicare tax (the “regular” Medicare tax).Feb 10, 2014
Hmm $40 seems high, my tax calculator says $16.83 is what you should have paid.
Unless you have high unemployment tax.
I am lucky that I can 1099 and pass "the litmus test"
I do miss being a new company that paid under the table.
Those were the days. This post was edited on 10/17/16 at 11:30 am
Posted on 10/17/16 at 11:36 am to brmach
quote:
Do you mean that the total payroll tax deposit was over $40? Because that would make more sense
This is what I was trying to get at by asking for the break down, from the way I read the OP, he was looking at the net paycheck, and then looking at all the payroll taxes (employee and employer contribution, etc)and not making the distinction that even though the OP was writing the check for so much, a portion of it was withholding which was the employee paying, and making that little will prob get back in the form of a refund at the end of the tax year
and yes i agree, paying taxes suck, and if everybody had to mail in a check every month for the taxes they owe vs having a payroll deduction we would have a revolt
This post was edited on 10/17/16 at 11:38 am
Posted on 10/17/16 at 11:39 am to gsvar2004
The employer taxes would be:
1) Payroll employer share - 220 x 7.65% = $16.83
2) Fed Unemployment: 220 x 0.08% = $1.76
3) State unemployment - varies... but the base rate is 2.05% in Louisiana, so 220 x 2.05% $4.51.
So total of about $23.10.
The $40 may also include fees for your payroll provider (who are you using?) as well as withholding for your employee (that comes out of his pocket, not yours).
In other words... if his gross is 220, his net check should have been less than 220 due to his withholding, and the amount you send to the payroll service is 220 plus your employer taxes of 23.10 plus any payroll service fees.
1) Payroll employer share - 220 x 7.65% = $16.83
2) Fed Unemployment: 220 x 0.08% = $1.76
3) State unemployment - varies... but the base rate is 2.05% in Louisiana, so 220 x 2.05% $4.51.
So total of about $23.10.
The $40 may also include fees for your payroll provider (who are you using?) as well as withholding for your employee (that comes out of his pocket, not yours).
In other words... if his gross is 220, his net check should have been less than 220 due to his withholding, and the amount you send to the payroll service is 220 plus your employer taxes of 23.10 plus any payroll service fees.
This post was edited on 10/17/16 at 11:41 am
Posted on 10/17/16 at 11:42 am to gsvar2004
quote:
Looking like we will be going the 1099 route again.
Please don't do this. You will be exposing yourself to all kinds of penalties and back taxes if he is found to be en employee.
Payroll taxes are a cost of doing business.
Posted on 10/17/16 at 11:44 am to LSUFanHouston
quote:
Please don't do this. You will be exposing yourself to all kinds of penalties and back taxes if he is found to be en employee.
Payroll taxes are a cost of doing business.
agree, and also I hope you are paying him less as a w2 employee than you were as a 1099 contractor
Posted on 10/17/16 at 12:19 pm to LSUFanHouston
quote:
Please don't do this. You will be exposing yourself to all kinds of penalties and back taxes if he is found to be en employee.
Yep. Friend of a friend is going through this now. He's perilously close to losing his business over it. 3+ years of back taxes on 3 "employees."
Posted on 10/17/16 at 12:26 pm to LSUFanHouston
quote:
The employer taxes would be:
1) Payroll employer share - 220 x 7.65% = $16.83
2) Fed Unemployment: 220 x 0.08% = $1.76
3) State unemployment - varies... but the base rate is 2.05% in Louisiana, so 220 x 2.05% $4.51.
So total of about $23.10.
The $40 may also include fees for your payroll provider (who are you using?) as well as withholding for your employee (that comes out of his pocket, not yours).
In other words... if his gross is 220, his net check should have been less than 220 due to his withholding, and the amount you send to the payroll service is 220 plus your employer taxes of 23.10 plus any payroll service fees.
this is right, i was confused by the whole thing. it was 220 for gross, that 40 included his with holding as well as my 23.10 position. it just looks like 3 different charges on my account, 202 and change, 16 and change, then 23.10. i was unaware when i was convinced to do this that i would owe more than him for employer taxes. yeah, he's a "true" employee that i have be 1099ing unknowingly wrong for about a year and was told i needed to do it this way. just sucks that it cost me 320 to pay him 220 buy the time its said and done. his next check for 2 weeks will be about 4x that so i guess i can expect 4x the taxes? sucks.
Posted on 10/17/16 at 12:28 pm to Tigerpaw123
quote:
agree, and also I hope you are paying him less as a w2 employee than you were as a 1099 contractor
im not, because i didn't know better, and have just cut into my bottom line.
Posted on 10/17/16 at 12:36 pm to gsvar2004
quote:
just sucks that it cost me 320 to pay him 220 buy the time its said and done
We have accounted for his net check of 202
his with holing of 16
and your portion of 23
so that is ~241, where is the other ~ $80 coming from?
Posted on 10/17/16 at 12:41 pm to Tigerpaw123
really only 65 which is the payroll fee.
Page 1 of 3
Back to top
Follow TigerDroppings for LSU Football News