Payroll Service
Your staff notice one deadline above every other. Payroll set up properly, and matched to the books, keeps pay day uneventful.
- Bookkeeping & accounting
- Accurate & organized
- Work directly with the owner
- Call, email or WhatsApp
When the wage numbers do not agree
The bank statement shows one figure for wages. The accounting file shows another. The quarterly filing used a third, and nobody can say which of them is right. That is the payroll problem owners describe, and it usually has little to do with the pay run itself. Somebody got paid. The trouble is everything that was supposed to happen around the payment.
A payroll run turns hours or salary into gross pay, takes out the amounts the law says to withhold, works out what the employer owes on top, pays the net amount to each person, and then sends the withheld and employer amounts to the right agency on the right schedule. Each of those steps leaves a trail that has to land in the books in the right accounts.
Payroll is one of the services JE Ledger offers. What it should cover for your business depends on how many people you pay, how often, and what is already in place, so the first conversation is about exactly that.
What one pay run actually involves
On the federal side, the employer's rules sit in IRS Publication 15, the Employer's Tax Guide. It covers withholding federal income tax from wages, the social security and Medicare taxes that come out of each paycheck and that the employer matches, when those amounts have to be deposited, and the quarterly return that reports them, Form 941.
That is a lot of moving parts for something that looks like one payment from the bank. Gross pay is the expense. The withheld amounts belong to the government from the moment they are taken out of the paycheck, and they sit on your balance sheet as a liability until they are deposited. The employer's share of the taxes is its own expense. If all of that arrives in the books as one lump labeled "payroll", the profit and loss is wrong and the liabilities are invisible.
What changes when the business is in Florida
Florida does not impose a personal income tax, as the Florida Department of Revenue puts it, and Article VII, Section 5 of the state constitution restricts one. So there is no state income tax to withhold from wages, which removes a whole layer of filings that employers in other states carry.
Florida does have reemployment tax, the state's unemployment insurance tax, which the Florida Department of Revenue administers. The Department lists the conditions that make an employer liable, one of which is a quarterly payroll of $1,500 or more in a calendar year, and liable employers report quarterly. Florida employers also have to report each new hire within 20 days of the hire date, under section 409.2576 of the Florida Statutes.
None of this is exotic, but each item has its own account and its own schedule, and missing one tends to surface months later as a notice in the mail.
Why payroll has to reconcile like any other account
The test of payroll in the books is simple. After every deposit, the liability accounts for withheld tax should drop back to what is still owed for the current period. If they keep growing, something was recorded and never paid, or paid and never recorded. Either one will eventually show up on a filing.
Reconciling payroll means matching the pay records to the bank, the bank to the deposits, and the deposits to the quarterly return. It is dull work, and it is the part that decides whether the wage figure on your profit and loss can be trusted when you use it to price a job or decide whether to hire.
What to have ready before you call
A short list makes the first conversation far more useful. How many people you pay, and whether any of them are contractors rather than employees. How often you pay, and whether pay is hourly, salaried or mixed. What you use to run payroll today, if anything, and who handles the filings. The last few pay records, and any letters from the IRS or the Florida Department of Revenue you have not dealt with yet.
With that in hand Javier can tell you straight what he would take on, and what should stay with a payroll provider or your tax preparer.
What does a payroll service do for a small business?
A payroll service calculates each person's gross pay, withholds the federal income, social security and Medicare taxes set out in IRS Publication 15, pays the net amount, deposits the withheld and employer taxes on schedule, and files the returns that report them. In Florida there is no state income tax to withhold, but reemployment tax and new hire reporting still apply. The part owners most often miss is recording all of it correctly in the books, so the wage expense and the tax liabilities match what was actually paid. JE Ledger offers payroll service. Call (305) 748-1367 to talk through what your payroll needs.
Office hours: Monday to Friday, 8:00 AM to 5:00 PM.
Payroll Service FAQs
Do Florida employers withhold state income tax?
No. Florida does not impose a personal income tax, according to the Florida Department of Revenue, so there is nothing to withhold for it. Federal withholding still applies as set out in IRS Publication 15.
What is Florida reemployment tax?
It is Florida's unemployment insurance tax on employers, administered by the Florida Department of Revenue, which lists the conditions that make an employer liable. Liable employers report quarterly. It is an employer cost, not something taken out of an employee's paycheck.
Are contractors paid through payroll?
Usually not. Payroll withholding applies to employees, and whether someone is an employee depends on the working relationship, not on what the paperwork calls them. IRS Publication 15 explains who counts as an employee. If you are unsure about someone, raise it early, because the answer changes what has to be filed.
What would JE Ledger handle?
That is what the first conversation is for. Tell Javier how you pay people today and what you want off your plate, and he will tell you what he would take on and what belongs with someone else.
What does payroll service cost?
It depends on how many people you pay, how often, and what state the current records are in. No single figure would be honest for every business. Call (305) 748-1367 or email [email protected] and describe your setup.
Sources
- Tax Information for New Residents (GT-800025), Florida Department of Revenue
- IRS Publication 15 (Circular E), Employer's Tax Guide
- Reemployment Tax, Florida Department of Revenue
- Article VII, Section 5, Florida Constitution
- Section 409.2576, Florida Statutes (new hire reporting)
- Services for Employers, Florida Department of Revenue
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Where to Next
Keep reading, or get in touch and tell us where the books stand.