As a first time owner of a small to medium sized start-up or business, you might wonder about the variety of employees that you may have drawing income and what that means for your payroll service. This can include part and full time employees, temporary help or freelance contractors. Do they get paid differently? We’re here to help you and your payroll service understand the differences and what that means for you and your business.
Make your life easier with the help of QuickBooks payroll software!
There can be significant legal ramifications related to placing an employee in the wrong category for payroll. These legal issues can also lead to increase in the cost to you in the form of fines and fees. Make sure your payroll service is using up to date software (available through QuickBooks) to help minimize this risk, as they regularly update it with the most recent tax codes and changes. Tax law and statutory upgrades happen frequently with the IRS and it is best to be as on top of these chances as possible.
There is a major difference between employees who are paid hourly wages (wage employees) and those that are paid salary (salary employees). Mixing those two categories up has implications on how tax is paid and remuneration (basically, payment) is calculated. Freelance employees (also called contract employees) are also paid at a different tax rate, depending on their contract length and terms. Here is a little more detail on the differences which will hopefully be helpful to your payroll service. This is also covered with the QuickBooks software.
– Wages : Wage employees are assigned an hourly pay rate and are usually paid on either a weekly or bi-weekly basis. The amount paid can vary week to week depending on how many hours they actually work, which they will usually clock in and clock out for.
– Salaries : Salaried employees earn a fixed amount and are paid the same time as wage employees (bi-weekly or monthly, many times). Even though they are not clocking in and out, they are still required to maintain a certain number of hours. The amount they are paid is usually added up for the year and then divided monthly over the calendar year.
– Contract workers : Normally, contract workers (or freelancers) will be sending your payroll service an invoice and is also responsible for paying their own taxes. Occasionally, a payroll outsourcing service may choose to take this own, but the norm is for contract employees to handle that all themselves according to your agreed upon contract.
QuickBooks software can make short, easy work of your in-house payroll service and significanly reduce the potential for errors and the fees and fines related to those errors. Check your software, there are payroll courses available through them as well if you want to know more. Also, if you’re interested in more information about payroll service and payroll outsourcing, please check out www.payrollserviceaustralia.com.au!