The Burden of Payroll
07 Feb 2012 | Category: accounting-payroll | Author: admin
And I am not talking about the actual time and cost of getting your employees paid, but all those costs often not considered when providing a customer an estimate or proposal or not included in budgets and financial planning.
The cost burden of payroll includes all expenses incurred over and above an employee's wage. To get to the true hourly cost of an employee you need to take these into consideration. The employer's share of FICA, Medicare, and State and Federal unemployment taxes are common examples of payroll burden, however there are others to include in your payroll costs.
Workman's compensation and part of your general liability insurance premiums are based on wages paid. These rates vary from state to state as well as job classification and these costs are part of your payroll burden. You can find out the cost of the premium per wage dollar paid from your insurance agent.
The cost of paid vacation, sick, personal and holidays should also be included in the cost of payroll. To do this, determine the number of paid days off an employee is entitled to and multiply that number by the employee's average daily wage. Then divide by the number of working days in a year (for example - 52 weeks less 2 weeks vacation equals 50 working weeks). And then divide by the average number of hours worked in a week resulting in an average hourly cost of paid time off. For example an employee paid $800.00 per a 40 hour week with two weeks paid vacation, 1 week of paid sick leave and eight paid holidays computation would be: 10 days vacation + 5 days sick + 8 holidays = 23 paid non-working days. $800/5 days = $160 per day paid wages. $160 x 23 non-working days = $3,680 (yearly cost of non-working days). There are 260 possible working days in the year (52 x 5) less the 23 non-working days = 237 working days. These 237 working days need to be burdened with the cost of the 23 non-working paid days. Divide the expense of the non-working days by the number of working days ($3,680/237) which is $15.53 per day. Divide the $15.53 by 8 hours and you have your hourly burden cost for paid days off. Depending on your company you may have employees working overtime or even less than a 40 hour week occasionally. Unless you think this may affect your burden substantially you can base your figures on the "usual order of business".
Other expenses you should consider are health, dental, and/or disability insurance premiums paid by the company (net of employee contributions). And if you are providing a vehicle to your employee the cost of purchasing, financing and insuring that vehicle may be an expense to include. Also any other employee benefit cost that the company provides should be considered as part of the payroll burden charge.
When all is said is done, the wage you pay your employee for a day's work is just the beginning of the cost of that employee. Not determining the cost of your payroll burden can shave profits from your bottom line. And without profits we can not continue to stay in business.
Payroll Texas, Unique Aspects of Texas Payroll Law and Practice
22 Dec 2011 | Category: accounting-payroll | Author: admin
There is no personal state income tax in Texas. Which means no withholding of State Income Taxes.
The Texas State Agency charged with enforcing the state wage and hour laws is:
The Texas Workforce Commission
101 East 15th St.
Austin, Texas 78778-0001
512-837-9559
Except for taxes and student loans there are no garnishments in Texas. No creditor other than the IRS or one of the student loan collection agencies can take money out of your paycheck without your permission.
The agency that collects and pays unemployment benefits is the Texas Workforce Commission.
Its main office is in Austin, Texas. Their address is:
Texas Workforce Commission
101 East 15th Street
Austin, Texas 78778-0001
512-837-9559
The unemployment rate varies based on your company’s experience but the initial rate starts at 2.7% on the first 9000.00 of wages paid to an employee in the state.
There is no requirement in Texas for a company to carry Workers Compensation Insurance. Texas is the only state where it is not required.
Texas now allows mandatory imposition of Direct Deposit. The employer just cannot choose the financial institution the employee has the right to pick any financial institution that accepts direct deposits. There must be no additional fees to the employee for direct deposit.
Another unique aspect of Payroll in Texas is there is no provision in the State law for overtime. All overtime is governed only by FLSA if appropriate. So a purely intrastate employer in Texas does not have to legally pay overtime premium.
The state minimum wage in Texas is $5.15 per hour. It used to be well under federal rates.
In Texas you must pay at least semi-monthly except that FLSA-exempt employee can be paid on a monthly basis.
Payment on termination in Texas is six days for an involuntary termination and the next regular payday for a voluntary resignation
Texas requires the following information on an employee’s paystub:
- Employee’s Name
- Pay rate
- Gross and net earnings
- Amount and purpose of deductions
- Hours worked or work done if piece work
Escheat laws in Texas require that unclaimed wages be paid over to the state after one year and 180 days if less than $100.00. The employer is further required in Texas to keep a record of the wages abandoned and turned over to the state for a period of 10 years.
Wages due a deceased employee are not covered by any provision in Texas.
Texas State new hire reporting requirements are that every employer must report every new hire and rehire. The employer must report the federally required elements of:
- Employee’s name
- Employee’s address
- Employee’s social security number
- Employer’s name
- Employers address
- Employer’s Federal Employer Identification Number (EIN)
Plus they can optionally report
- Date of Birth
- Date of Hire
- Payroll address for Child Support Notice
This information must be reported within 20 days of the hiring or rehiring.
The information can be sent as a W4 or equivalent by mail, fax or electronically.
There is no penalty currently for a late report.
The Texas new hire reporting agency can be reached at 888-839-4473 or on the web at [http://www.newhire.org/tx] .
There is no provision in the Texas State Payroll laws covering mandatory rest or meal breaks.
Cafeteria Plan and 401(k) deferrals that are exempt from federal income tax are counted as taxable income for unemployment insurance calculation in Texas.
Texas requires magnetic media reporting of earnings and contributions for unemployment insurance purposes if the employer has at least 250 employees to report.
Texas has no State Income tax so no State W2’s have to be prepared, distributed or transmitted to the state
Texas has the following provisions for child support deductions:
- When to start Withholding? Immediately after receipt of order.
- When to send Payment? Within 7 days of Payday.
- When to send Termination Notice? Within 7 days of termination.
- Maximum Administrative Fee? $2 per month.
- Withholding Limits? Federal Rules under CCPA.
The Texas agency charged with enforcing Child Support Orders and laws is:
Child Support Division
Office of the Attorney General
300 W. 15th Street
Austin, TX 78701
512-460-6000
http://www.oag.state.tx.us/child/#services
States have different requirements for maintaining wage and hour records that vary from the two or three years FLSA requires depending on the type of record. Texas has no provision in the law concerning retention
Payroll New Jersey, Unique Aspects of New Jersey Payroll Law and Practice
05 Nov 2011 | Category: accounting-payroll | Author: admin
The New Jersey State Agency that oversees the collection and reporting of State income taxes deducted from payroll checks is:
Department of the Treasury
Division of Revenue
50 Barrack St. CN 248
Trenton, NJ 08648-0248
(609) 292-6400
(800) 323-4400 (in state)
http://www.state.nj.us/treasury/revenue
New Jersey allows you to use the Federal W-4 form to calculate state income tax withholding or the New Jersey form "NJ-W4 Employee's Withholding Allowance Certificate".
Not all states allow salary reductions made under Section 125 cafeteria plans or 401(k) to be treated in the same manner as the IRS code allows. In New Jersey cafeteria plans are taxable for income tax calculation; taxable for unemployment insurance purposes. 401(k) plan deferrals are not taxable for income taxes; taxable for unemployment purposes.
In New Jersey supplemental wages are required to be aggregated for the state income tax withholding calculation.
You may file your New Jersey State W-2s by magnetic media if you choose to.
The New Jersey State Unemployment Insurance Agency is:
Unemployment and Disability Insurance
John Fitch Plaza
P.O. Box 912
Trenton, NJ 08646
(609) 633-6400
http://www.nj.gov/labor/mainpages/employer.html
The State of New Jersey taxable wage base for unemployment purposes is wages up to $24,300.00.
New Jersey requires Magnetic media reporting of quarterly wage reporting if the employer has at least 100 employees that they are reporting that quarter.
Unemployment records must be retained in New Jersey for a minimum period of five years. This information generally includes: name; social security number; dates of hire, rehire and termination; wages by period; payroll pay periods and pay dates; date and circumstances of termination.
The New Jersey State Agency charged with enforcing the state wage and hour laws is:
Department of Labor
Division of Labor Standards and Safety Enforcement
Office of Wage and Hour Compliance
225 E. State St.
P.O. Box 389
Trenton, NJ 08625-0389
(609) 292-7860
http://www.state.nj.us/labor/mainpages/employer.html
The minimum wage in New Jersey is $5.15 per hour.
The general provision in New Jersey concerning paying overtime in a non-FLSA covered employer is one and one half times regular rate after 40-hour week.
New Jersey State new hire reporting requirements are that every employer must report every new hire and rehire. The employer must report the federally required elements of:
- Employee's name
- Employee's date of birth
- Employee's address
- Employee's social security number
- Employer's name
- Employers address
- Employer's Federal Employer Identification Number (EIN)
This information must be reported within 20 days of the hiring or rehiring; every 15 days on mag media. The information can be sent as a W4 or equivalent by mail, fax or electronically. There is a $25.00 penalty for a late report and $500 for conspiracy in New Jersey.
The New Jersey new hire-reporting agency can be reached at 888-624-6339, 877-654-4737, or 609-689-1900 or on the web at http://www.nj-newhire.com
New Jersey does not allow compulsory direct deposit
New Jersey requires the following information on an employee's pay stub:
- statement of total wages and deductionsNew Jersey requires that employee be paid no less often than semimonthly; monthly for exempt employees.
New Jersey requires that the lag time between the end of the pay period and the payment of wages to the employee not exceed ten days.
New Jersey payroll law requires that involuntarily terminated employees must be paid their final pay by their next regular payday (by mail at employee's request) and that voluntarily terminated employees must be paid their final pay by the next regular payday or by mail if employee requests it.
Deceased employee's wages must be paid when normally due to the surviving spouse, children 18 or over, guardian of minor children, parents, siblings, or person paying funeral expenses (in that order).
Escheat laws in New Jersey require that unclaimed wages be paid over to the state after one year.
The employer is further required in New Jersey to keep a record of the wages abandoned and turned over to the state for a period of 5 years.
New Jersey payroll law mandates no more than 40% (less for some workers) of minimum wage may be used as a tip credit.
In the New Jersey payroll law there is no provision covering required rest or meal periods.
New Jersey statute requires that wage and hour records be kept for a period of not less than one year. These records will normally consist of at least the information required under FLSA.
The New Jersey agency charged with enforcing Child Support Orders and laws is:
Department of Human Services
Division of Economic Assistance
Office of Child Support and Paternity Programs
State Services
Box CN 716
Trenton, NJ 08625
(877) 655-4371
New Jersey has the following provisions for child support deductions:
- When to start Withholding? First pay period ending after postmark date.
- When to send Payment? Payday
- When to send Termination Notice? "Promptly"
- Maximum Administrative Fee? $1 per payment.
- Withholding Limits? Federal Rules under CCPA.
Please note that this article is not updated for changes that can and will happen from time to time.
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