The Dos and Don’ts of Payroll in Georgia
In Georgia, you’re required to report your employees’ income on a W-2 at the end of the year; this is where payroll comes in handy. Payroll can be an intimidating, complicated process, but it doesn’t have to be so difficult if you follow these dos and don’ts from the experts.
Get Proper Training
To avoid making costly mistakes, make sure you get the right training. The first step to do payroll in Georgia is to consult a knowledgeable expert that can show you the ropes. With that said, we would like to take this opportunity to provide a few key tips:
-Separate taxes from income -When separating taxes from income, withhold an amount for federal withholding tax, state withholding tax and local withholding tax. -Report gross wages as before federal withholding tax. -Take care when computing deductions for taxable benefits such as retirement plans or health care because these may be reported on IRS form W-2 before gross wages are reduced by federal withholding taxes.
Understand the Tax Implications
When you pay employees, you need to know the tax implications in order to report accurately. The amount you owe as a business owner will depend on whether the employee earns over $11,600 per year, but that’s not all: if your employee has no income from other sources and lives with you for more than half the year, their tax deductions are greater than those without that status. For example, single employees without kids will have a standard deduction of $6,350 at their filing status level; a married couple with children could file at head-of-household status and deduct $12,700. Check IRS Publication 926 for full details.
Know Where You’re Required to Report Payments: If an employer makes payments totaling $600 or more to an individual during any calendar year, they must be reported on form 1099-MISC. Keep Records: You’ll need to keep records like time sheets or payroll reports (in some cases), which will prove your payments were made appropriately and provide information such as the hours worked each day and weekly earnings so there is no confusion when it comes time for taxes.
Know when to pay yourself
You should know that when you start a new business, you’re the owner. For example, when calculating payroll taxes, do not include yourself as an employee. With that said, if your company is growing to have multiple owners, you may have to implement a more formal structure. In addition to knowing when to pay yourself, there are many other dos and don’ts for doing payroll in Georgia. These rules apply primarily for private employers with employees performing services for pay within the state of Georgia or receiving wages from an employer located in another state. If you don’t fall into this category, it’s possible that the rules will be different. Here are some dos and don’ts to keep in mind:
-Do get help with accounting tasks: When preparing your own tax return, make sure you seek help from qualified professionals like Certified Public Accountants (CPAs) who can help guide you through all the steps required by law.
-Don’t sign anything before reading it: Be aware of all tax forms and information regarding payroll, withholding income taxes, workers’ compensation insurance requirements and coverage periods so that both your employees and business are protected. It’s also important to understand how much money will be withheld from their paychecks on each paycheck so they can plan accordingly.
Consider using a payroll service
There are a few fees that you’ll need to know about when doing payroll. If your business has employees, you’ll be responsible for paying them on a weekly or biweekly basis with checks from your own bank account or online through our Digital Banking, which we can show you how to do. You can also pay employees by electronic direct deposit, the quickest way to get their money. Employees will have to fill out a form specifying the routing number and account number they would like the company’s payroll deposits sent to, along with their Social Security number and your company’s Tax ID number.
There may be some extra costs associated with this service based on the amount of money being transferred each month; contact one of our Business Banking Representatives for more information. It’s possible to save yourself time and hassle by using a payroll service. They provide all of the necessary documents, calculations, tax filing paperwork and employee payments without any headaches for you. Just set up an account with the company, download their app if available, then enter your employee data including name, address, rate per hour (with taxes already calculated), hours worked per week and any benefits offered. The rest is automated: no heavy lifting required!
Be aware of the fees you must pay
There are a few things you should be aware of before starting payroll in Georgia. The first thing to know is that there are different types of paychecks, the most common being an agency check. These checks come from the employer but are then endorsed over to the employee, who signs them on the back before cashing them. Agencies typically do not allow deductions, which is a downside if you need to withhold any money (a mortgage or student loan payment) from your paycheck since you cannot make a deduction when an agency pays out your wages. Having a direct deposit is another way employees get paid – employees input their bank information into their company’s account and receive payments directly deposited into their account. Employees can also opt for paperless pay where they can enter their bank information online and it will automatically go through.
One more thing to note is the social security contribution: Employers must match an employee’s contribution up to 6%. Any more than that will result in a $1 increase for every 1% contributed by the employer.