Sam, from Sam’s Sports Bar, LLC, stopped in last week to discuss payroll. It seems that Sam’s buddy, Ted just had a visit from the IRS concerning payroll for his staff. The IRS told Ted that his staff had to be paid at their gross wage amount and have federal, state and local taxes deducted to come up with a net amount that a check would be cut for.

 Apparently Ted had been just giving his staff cash at the net amount and was in big trouble with the IRS. Sam gets a lot of advice from Ted and he wanted to make sure he was doing it correctly. Fortunately for Sam he was. I told Sam he needed to explain to Ted what his options were for running payroll.
Option one – Do it yourself. This option is by far the least expensive in the short term but also potentially the most expensive in the long run. Not only do you have to calculate the gross wage amount correctly, but you also have to prepare and file federal, state, local, federal unemployment and state unemployment tax returns and make all the payments timely and, in this day and age, electronically.
Option two – Outsource it. This option costs a little more but will save you in the long run. You turn in your hours to a third party service bureau that will accurately calculate the gross to net amounts and will take full responsibility for preparing and filing all the taxes, including the year-end filings necessary. They send you the checks completed and ready to hand out to the employees.
I told Sam to have Ted give us a call and we could help him in this area.
To be continued……….