andrew

Do I use the new I-9 forms for all employees or just my new hires?

larryshaub — Tue, 14 Jul 2009 00:12:58 +0000

Thanks Tatia from Life Centers for this question. You need to use the revised/updated I-9 form for all employees hired on/after April 3,2009. You need not complete new I-9 forms for employees who already have I-9s on file, and were hired by you before April 3,2009. The new I-9 form has a revision date of 2/2/09, and should be used until a pending new version is released. You can learn much more about the I-9 requirements at www.uscis.gov or by calling 1-800-870-3676. You can also obtain a Spanish-speaking version at the USCIS website or by calling the 1-800#——Thank you for asking me this question!!!—Andrew

The Perfect Pension Plan

larryshaub — Wed, 05 Dec 2007 12:28:35 +0000

Tax law provides many different types of tax-deductible qualified retirement plans which employers can use as a fringe benefit for the owners and their employees. Some national payroll companies sell “one size fits all” plans to their payroll clients. Our experience is that selection of the appropriate type of retirement plan is a critical business and financial decision. Factors to consider in selecting a retirement plan are:

How much do the owners wish to set aside each year into the retirement plan? Maximum funding amounts vary significantly among different types of plans;

How much would you like to fund for non-owner employees? Do you prefer that employees with longer tenure receive more retirement funding? Or those who are older?;

Would you prefer to fund more for employees who contribute a portion of their own compensation into the retirement plan? Or do you wish to contribute to employees’ retirement plans regardless of their level of participation?; and

Are you comfortable with locking in an annual retirement funding amount, or do you prefer to select annual funding amounts based on each year’s profits and cash flow?

Central Indiana has several pension consulting firms who can help you select a plan which meets your business and financial objectives. AccuPay’s CPP/CPA advisors can also help you select a retirement plan which would be a good fit for your organization.

HSA Payroll Reporting

larryshaub — Wed, 05 Dec 2007 12:08:54 +0000

Health savings accounts (HSAs) are increasingly being used by employers as a tool to offset the rapidly increasing cost of group health insurance. Funding employee “HSAs” can be accomplished by employer contributions, employee contributions, or in many cases a combination of both. Here are the tax rules pertaining to HSA funding:
Employer contributions to employee HSA accounts are not taxable for income or payroll taxes, and are tax-deductible fringe benefits to the employer (Note – this income exclusion does not apply to “S” corporation shareholders or partners);

Employee payroll deductions for HSA contributions are generally “after-tax”, and therefore subject to income and payroll taxes by your payroll system. The employees can deduct their HSA contributions as income tax deductions on their personal returns; and

If employees contribute to HSA accounts pursuant to a written Section 125 “cafeteria” plan, their HSA contributions are paid “pre-tax” for income, social security and Medicare taxes. Also, the employer saves the “match” of social security and Medicare taxes if the HSAs are an “includable benefit” in the employer’s written Section 125 plan.

BOTTOM LINE – An employer saves the cost of “matching” payroll taxes on employee funding of HSA accounts IF the employer includes HSAs as a benefit in their WRITTEN Section 125 cafeteria plan.

Paying Family Members

larryshaub — Wed, 05 Dec 2007 10:46:00 +0000

Business owners can save substantial taxes by paying wages to family members who provide services to the business. Consider paying wages yet this year to the following family members:
Wages paid to your spouse can be used by them to fund their 401K or SIMPLE – IRA plan on a pre-tax basis. If the spouse does not earn wages, they can not contribute to the business retirement plan;

A child can earn up to $5,350 in wage income during 2007 and pay zero Federal income tax. The business owner claims a deduction and saves income taxes at their tax rate; and

You can also pay wages to parents who work in your business, with the income taxed at your parent’s rate and the wage payments creating tax deductions at your marginal tax rate.

IMPORTANT – Any wage payments paid to family members must be at fair rates for services performed. You should maintain records which support how you calculated the wage amounts.

LLC Owners Payroll

larryshaub — Mon, 06 Aug 2007 15:19:59 +0000

AccuPay has picked up several payroll clients in which the LLC owner(s) have been “on the payroll” and received W-2 forms in previous years. This is incorrect! LLC owners are treated as “self-employed” for income and payroll tax purposes, and therefore should NOT BE ON THE PAYROLL. LLC members(fancy legal name for owners) should not be on the payroll and not get a W-2, but instead should be paid profit distributions “off the payroll” from the business operating account. An LLC owner pays both income and social security/medicare taxes just like a sole proprietor,i.e., in their personal tax return. An LLC owner should pay quarterly personal estimated tax payments to cover both income and “self-employment”(fica and medicare) taxes. AccuPay recommends that an LLC owner estimate their tax obligations, generally with the help of their CPA or tax advisor—Andrew’s Papaw(who is a CPA!)