Payroll Services
Let TMP handle the complexities of payroll, so you can focus on building and empowering your team with confidence.
Payroll Processing Services
Managing payroll in the United States can be complex and time-consuming, especially when balancing compliance with federal, state, and local tax regulations. Our expert team is here to simplify your payroll processes, ensuring accuracy and efficiency every step of the way.
Understanding IRS Rules: Employees vs. Contractors
Correctly classifying workers as employees or contractors is essential for IRS compliance and avoiding penalties.
Behavioral Control
Employees: Follow employer instructions on how, when, and where to work.
Contractors: Decide how to complete tasks independently.
Financial Control
Employees: Receive wages or salaries; expenses are often reimbursed.
Contractors: Handle their own expenses and have profit/loss potential.
Type of Relationship
Employees: Ongoing roles with benefits like insurance and PTO.
Contractors: Temporary or project-based roles with no additional benefits.
Work Tools and Resources
Employees: Use employer-provided tools and equipment.
Contractors: Provide and manage their own tools and materials.
Tax Responsibilities
Employees: Employer withholds taxes; receive a W-2 form.
Contractors: Handle their own taxes; receive a 1099 form for income over $600
How to stay IRS compliant with payroll processing
Navigating IRS payroll requirements can be challenging, but with the right processes in place, you can avoid costly penalties and ensure compliance. Here are some key ways to stay on track.
Accurate Employee Classification
Ensure workers are correctly classified as employees or independent contractors according to IRS guidelines. Misclassification can lead to significant tax penalties.
Timely Tax Deposits
Federal income tax, Social Security, and Medicare (FICA) must be withheld and deposited on time. Late or incorrect deposits can trigger penalties and interest.
Detailed Recordkeeping
Maintain accurate payroll records, including wages, hours worked, and tax filings. The IRS requires records to be kept for at least four years.
Correct Form Filing
Submit all required payroll forms, such as Forms 940, 941, W-2, and 1099, accurately and on time. Missing deadlines can disrupt compliance and lead to fines
Compliance with State and Local Tax Laws
Payroll taxes often vary by state and locality. Staying updated on these requirements is essential for ensuring full compliance.
Monitor Payroll Changes
Tax laws and regulations can change frequently. Keeping up-to-date ensures your business remains compliant with new rules and avoids surprises during audits.
Engage a Professional Payroll Service
A knowledgeable payroll provider ensures accurate processing, timely filings, and compliance with IRS and state tax laws. Professional oversight minimizes risks and allows you to focus on growing your business.
Regular Internal Audits
Conduct routine payroll audits to verify accuracy in tax calculations, employee classifications, and compliance with federal, state, and local regulations. Identifying and...
Accurate Employee Classification
Ensure workers are correctly classified as employees or independent contractors according to IRS guidelines. Misclassification can lead to significant tax penalties.
Compliance with State and Local Tax Laws
Payroll taxes often vary by state and locality. Staying updated on these requirements is essential for ensuring full compliance.
Timely Tax Deposits
Federal income tax, Social Security, and Medicare (FICA) must be withheld and deposited on time. Late or incorrect deposits can trigger penalties and interest.
Monitor Payroll Changes
Tax laws and regulations can change frequently. Keeping up-to-date ensures your business remains compliant with new rules and avoids surprises during audits.
Detailed Recordkeeping
Maintain accurate payroll records, including wages, hours worked, and tax filings. The IRS requires records to be kept for at least four years.
Engage a Professional Payroll Service
A knowledgeable payroll provider ensures accurate processing, timely filings, and compliance with IRS and state tax laws. Professional oversight minimizes risks and allows you to focus on growing your business.
Correct Form Filing
Submit all required payroll forms, such as Forms 940, 941, W-2, and 1099, accurately and on time. Missing deadlines can disrupt compliance and lead to fines
Regular Internal Audits
Conduct routine payroll audits to verify accuracy in tax calculations, employee classifications, and compliance with federal, state, and local regulations. Identifying and addressing errors proactively can prevent potential issues during IRS reviews.
What We Offer
Social Security and Medicare Taxes (FICA)
Under the Federal Insurance
Contributions Act (FICA)
- Employers and employees each contribute 6.2% for Social Security, up to the annual wage limit.
- Both contribute 1.45% for Medicare, with no wage limit.
- An additional 0.9% Medicare tax is required for employees earning above specific thresholds.
Reporting Requirements
- Form 941: Quarterly reporting of federal income tax withholding and Social Security/Medicare taxes.
- Form 940: Annual reporting of FUTA taxes.
- Form W-2: Annual wage and tax statements for employees.
State and Local
Payroll Taxes
In addition to federal requirements, employers must comply with state and local payroll tax laws, which vary widely across jurisdictions.
Employers must pay FUTA taxes to fund unemployment benefits. The tax applies to the first $7,000 of an employee’s wages annually, with potential credits available for state unemployment taxes paid.
Frequently Asked Questions (FAQs)
Find answers to common questions about Democracy
Our payroll accounting services cover federal, state, and local payroll tax compliance, employee classification, unemployment tax filings, payroll reporting (Forms 941, 940, and W-2), and customized support tailored to your business needs.
We stay updated with the latest IRS regulations and guidelines. Our team follows strict protocols to ensure accurate calculations, proper tax withholding, timely filings, and reporting to avoid penalties.
Yes, we handle state and local payroll tax compliance across all U.S. jurisdictions. This includes accurate calculations, filings, and remittances specific to your location.
The frequency of payroll tax deposits depends on the size of your tax liability. Deposits are typically made semi-weekly or monthly using the IRS’s Electronic Federal Tax Payment System (EFTPS). We’ll determine your deposit schedule and ensure compliance.
Yes, we prepare and file all necessary year-end payroll reports, including Form W-2 for employees and Form 1099 for independent contractors, ensuring accuracy and timely submission.
Social Security and Medicare taxes (FICA) are calculated based on employee wages. Both employers and employees contribute 6.2% for Social Security (up to the wage limit) and 1.45% for Medicare (with no limit). Additional Medicare tax applies to higher earners. Our team ensures precise calculations.
FUTA (Federal Unemployment Tax Act) tax funds unemployment benefits. It is paid solely by employers on the first $7,000 of an employee’s annual wages. We manage FUTA calculations and filings for you.
Yes, our team can assist with payroll audits by ensuring your records are accurate, complete, and compliant with federal and state regulations, minimizing risks of penalties.
Getting started is simple! Contact us to schedule a consultation, where we’ll discuss your payroll needs and customize a solution for your business.
Payroll in the U.S. involves the process of compensating employees for their work. This includes calculating wages, withholding taxes (e.g., federal income tax, Social Security, Medicare), and other deductions (e.g., health insurance, retirement contributions). Employers are responsible for depositing withheld taxes with the IRS and state agencies and filing payroll tax returns periodically. Accurate record-keeping and adherence to tax deadlines are essential to avoid penalties.
Payroll compliance refers to adhering to all federal, state, and local regulations regarding employee compensation and payroll taxes. This includes:
- Properly classifying workers as employees or independent contractors.
- Accurately withholding, depositing, and reporting payroll taxes.
- Maintaining detailed payroll records for the required retention period.
- Complying with wage and hour laws, such as paying overtime when applicable.
Staying compliant ensures businesses avoid penalties and legal risks associated with payroll errors.
Payroll compliance refers to adhering to all federal, state, and local regulations regarding employee compensation and payroll taxes.
- Payroll: Refers broadly to the process of managing employee compensation, including wages, benefits, and taxes.
- Certified Payroll: A specialized payroll report required for contractors working on federally funded projects. Certified payroll reports (Form WH-347) detail employee wages, hours worked, and fringe benefits to ensure compliance with the Davis-Bacon Act, which mandates prevailing wages on public works projects.
Certified payroll is specific to government contracts, while standard payroll applies to all employers.
How much will it cost for TMP to calculate my cryptocurrency gain and loss?
Basic
Up to 5 employees, services Included:
W-2 Issuance
Basic employment reports
IRS Filings: Forms 940, 941
Direct deposit setup
Expert
Up to 15 employees, services Included:
W-2 Issuance
Paystub generation (Monthly/Bi-weekly/weekly)
Detailed employment reports
IRS Filings: Forms 940, 941, state/local filings
Direct deposit setup
Premium Package
Up to 30 employees, services Included:
W-2 Issuance
Paystub generation (Monthly/Bi-weekly/weekly)
Detailed employment reports
IRS Filings: Forms 940, 941, state/local filings
Direct deposit setup
Why Us
Educating Clients
We focus on empowering our clients with the financial knowledge and resources needed to make informed decisions and achieve long-term success.
Seasoned Experts
Our team of experienced professionals brings extensive expertise in accounting and tax regulations, delivering reliable and thorough solutions tailored to your needs.
Personalized Solutions
We customize our services to fit the unique financial circumstances and goals of each client, offering targeted solutions that effectively address their challenges.
Modern Approach
Leveraging the latest technologies and innovative strategies, we deliver efficient, forward-thinking accounting and tax services designed to meet the evolving demands of businesses and individuals.
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