Hello, again.
Coming back to this blog, I have been trying to decide what to write about. I'll start off with something I added today. There is a link to Entrepreneur.com. I think you'll find a lot of articles here that can give you extra information that you can put to good use. I hope it comes in handy. You'll see it at the right under "Useful links".
The next thing to address, I suppose, is a continuation of having employees. You've decided to hire employees so you need to prepare for what this will require. First is going to be getting a Federal ID number. As I mentioned in a previous entry, this has a variety of names: FID, EIN, FEIN, tax ID, etc. Ultimately, it's a number assigned to your business so the government knows you may be paying employees for their work. This number is obtained by filing a form SS-4. You can see it and also fill it out and print it for mailing at: http://www.irs.gov/pub/irs-pdf/fss4.pdf?portlet=3 . You can get to this form by going to another link I have on the right called "IRS web site - great for forms". Once you complete this form and send it to the SSA office in the instructions, you will receive notice within a few days or couple of weeks, telling you what your number is. You will also need to contact any state and local authorities to advise them of your need to pay income taxes withheld from employees.
Each authority will require you to complete a form and return it to their office with payment of the taxes withheld for the time period they require. Usually this will be quarterly, but often, it will be monthly. The form will most likely require you to indicate the amount of wages paid, tax withheld and possibly the tax liability if it's different from the amount withheld. When you return this form, you will need to submit payment at the same time.
On the cash side of this, you will want to plan your payments around your payroll requirements so you can be sure you have the money available for these taxes. If you have $3,000 in gross payroll each week, (hours worked times rates paid), and your tax rate is 3%, you should to plan on saving $90.00 each week until it is time to pay your taxes. Then you can pay on time and not have to wonder how you will come up with the money. The nice thing about this is that using the gross payroll figure will allow you to cover this figure. To be more specific, if you have gross payroll of $3,000 but the actual amount of your paychecks is $2,400, you know to set $600.00 aside for payments when you have to file your monthly or quarterly taxes.
That's all for today. Next entry: the Federal form 941...a little more involved.
Gary
