For those who are have just hired your first employee (and it may be yourself if you have just incorporated), you are facing the task of having to deal with payroll tax withholding and depositing, and all the payroll tax form filings. Most of you know that help is available (for a fee) from the national services (ADP, Paycheck), the large banks (B of A, Well Fargo, Union Bank), your software provider such as QuickBooks, or from most accountants. However, two additional services (think retirement plans, and workers compensation insurance) offered by the national services may be the deciding factor for you in choosing how you will address the various payroll tasks.
The national firms (ADP, and Paycheck to name two) offer relatively cheap 401K programs for even the smallest of employers (1 employee) at prices that you can’t match from most providers (if they offer the service at all), and they offer workers compensation insurance programs at rates that individual employers can’t qualify for. As you should be aware, in California it is mandatory to carry Workers Compensation insurance if you have non owner employees. Penalties and fines (and lawsuits) await those who don’t get and maintain it. So check out both of these issues before deciding how you are going to address your payroll withholding and reporting responsibilities. The savings from your workers compensation insurance premiums alone may pay for the payroll service.
Good luck and here’s hoping it “all adds up” for you.
(If there is any area in accounting or tax that you think needs to be addressed in this newsletter please e-mail Dick at Ginnatycpa@aol.com and if it is of general interest, he will address it in future articles)