Payroll processing is considered one of the more complex and time consuming tasks for businesses. For those who may be starting up a new business, you may have a lot of questions about Payroll processing. Mark Dicus & Company will share some of the top asked questions about payroll processing and how professional services can help jump start your business.
What is an EIN Number?
The IRS issues an (e)mployee (i)dentification (n)umber which is the EIN. The EIN is a nine digit number that will be used on federal and state tax documents which is filed for the business. One of the many federal and state tax documents includes the Payroll Tax Report. You can apply for an EIN online through IRS.gov. The EIN can be used for many different business entities including sole proprietorship, S corporations, and C corporations.
What is an I-9 Form?
An I-9 Form is used by employers to help verify the identity and the employment status of an individual that works for the company. Every employer in the U.S. must complete an I-9 Form for each of their employees at the time they are hired for both U.S. citizens and non U.S. citizens. Every employee must provide documents that provide identity such as driver’s license, birth certificate, and or passport. The employer must retain each I-9 Form for a certain period of time. Both the state and federal government offices have the right to review or inspect the form at any time.
What is a W-4 Form?
Each employee must complete an IRS W-4 from. A W-4 form indicates the amount of taxes that is being withheld from the employee’s gross pay for federal income taxes. A similar form is completed for state income tax withholdings as well. To determine the payroll taxes a completed W-4 can be used by the employer to calculate the dollar amount of the federal income taxes. The employer must follow the IRS guideline when calculating the income taxes withheld.
Withholding Tax Meaning
Withholding refers to the money or dollar amount that federal or state collects for income taxes. The employer will collect the taxes from the employee’s gross pay. Again, the dollar amount is determined by the IRS guideline from the W-4 form and the state’s withholding form. The company sends the withheld taxes to the IRS and the state’s department revenue. The dollar amount of the money withheld is reported to the employee on their W-2 from after the end of the year. It is the responsibility of the employee to file their own tax returns and to calculate their tax liability.
What Can a Payroll Services Company Do for My Small Business?
A payroll company can help businesses by performing many of the more complex tasks of payroll processing. Not only do they help process all of the paperwork, they do it accurately. They ensure all of the payroll documents are completed. Additionally, they can calculate withholdings and taxes for all of the businesses employees. Having a professional accountant and tax service that undergoes the task of payroll and more, can greatly benefit the company and remove excess stress on the businesses owner.