Managing payroll often means dealing with a nonstop series of deadlines. Whether it's collecting a new employee payroll form right after a hire or getting your payroll taxes in by state and federal deadlines, your organization needs to handle everything promptly or you risk fines, penalties and even audits.
The New Employee Payroll Form
New employees need to submit a Form W-4 to your payroll department. This form lists the employee's name, address, social security number, marital status and number of allowances so your payroll department can figure out the amount that needs to be withheld from their paycheck for federal taxes. Employees also will need to fill out a similar form for their state income tax withholding.
If an employee does not fill out these forms, the IRS notes that you handle their withholding as if they were single and had no withholding allowances. Therefore, taxes would be withheld at the highest level. You don't need to submit Form W-4 to the IRS, but they could require you to adjust an employee's withholding if they determine it's too low.
Form 941 and Reporting Tax Deadlines
Every quarter, your company needs to submit Form 941 (Employer's Quarterly Federal Tax Return) generally on April 30, July 31, Oct. 31 and Jan. 31, according to the IRS. Form 941 summarizes federal wages and taxes for each quarter.
Payroll Tax Deposits
Employers are required to deposit federal tax liabilities based upon a deposit frequency schedule determined by the IRS. There are two deposit schedules — monthly and semiweekly — for determining when to deposit social security, Medicare and withheld income taxes. The frequency is determined at the beginning of each calendar year, and is based on the total tax liability reported on Form 941 during a lookback period as defined by the IRS.
Generally speaking, if your payroll tax liability was less than $50,000 during the lookback period, you will have a monthly deposit frequency, and if your payroll tax liability was $50,000 or greater during the lookback period, you will have a semi-weekly deposit frequency. For more details, please refer to IRS Publication 15.
If you follow a monthly schedule, the payments are due on the 15th of each month following the month in which the liability was incurred (i.e. – January liability is due February 15). If you follow the semiweekly schedule, the deadline depends on your payday. According to the IRS, if your payday falls between Wednesday and Friday, you must deposit taxes by the following Wednesday, but if your payday falls between Saturday and Tuesday, you must deposit taxes by that Friday. If your tax deposit is late, you could be charged a penalty of up to 15 percent of the unpaid taxes, depending on how late you are with the deposit, according to the IRS
Form W-2 and Form 1099-S
Every year, your organization needs to complete a Form W-2 for each employee. This form reports how much an employee earned and how much tax was withheld. You also need to complete Form 1099-MISC for every contractor who earned more than $600. These forms need to get out to your employees, your contractors and submitted to the Social Security Administration (SSA) by Jan. 31. This is a new deadline for 2017, according to the IRS.
In the past, organizations had until the end of February to file paper copies to the SSA and until the end of March to file electronically. If you're late on sending out these forms to the SSA and your employees, you may be subject to a penalty. State governments also require these forms and many states have pushed up their deadline earlier to meet the new IRS deadline.
How to Stay on Schedule
Part of their payroll's daily routine should be to plan for upcoming deadlines so there are no surprises. You and your HR leaders should make sure your system has the capabilities necessary to fully manage your payroll needs and accommodate various deadlines.
Outsourcing your payroll is also an effective way to help your organization stick to deadlines. Keeping track of all the federal, state and local deadlines can be a challenge, especially since they can change. One of a payroll provider's areas of focus would be on managing these deadlines, so the HR leader and accounting team can focus on other core HCM responsibilities.
There's nothing more frustrating than a costly fine from missing a payroll deadline by just a few days. By staying organized with accurate and up-to-date systems or outsourcing payroll to a trusted vendor, you should be able to help your organization avoid this problem.
SIGN UP FOR THE BOOST NEWSLETTER