Murrieta School of Business: Topic: Payroll 101

Presented by Daneen Ashworth, Merdian Payroll

Payroll 101
 

1. Entity Type (Sole Proprietor, LLC, C-Corp, S-Corp)
   1. Sole Proprietor can have employees.

2. LLC (Limited Liability Corporation) can have employees.

3. C-Corp can have employees.

2. Federal and State ID#’s/Workers Comp
   1. IRS issues an EIN.

2. EDD issues a number as well.

3. These numbers are used for the taxes.

4. You must have these to do payroll.

3. Responsibility of the business owner when processing payroll

1.  10 different taxes per check  (11.66% for a new business)

2.  Depositing of taxes in timely manner (per payroll/quarterly)

3.  6 Federal filings

4.  8 State filings

4. Timekeeping and Attendance

1. Signatures needed

2. Electronic approval (if ee has his/her own log in)

3. Different Methods

1. Spreadsheet

2. Software program

3. Program connected to payroll

4. Biometric

5. Traditional clock in/clock out device

5. Workers’ Comp. Insurance
   1. With traditional, you pay a deposit, your payroll is estimated and at the end of your term you will have an audit.  Typically you will owe money (balloon payment) or will be owed money (refund).

2. With Pay as You Go, you pay per payroll period based on actual payroll.

3. Rates vary based on industry

6. 1099 vs. W-2 Employee

1. 1099 contractor generally has his/her own liability insurance

2. 1099 contractor is under his/her own control (hours, duties)

3. No taxes are paid on a 1099 contractor

4. If it is found that you are paying a W-2 employee as a 1099 contractor, you will be fined:
   1. Employer taxes
   2. Employee taxes
   3. Penalties