Payroll is the process by which employees are compensated for their services. Pay day is only one day of the week for an employee – but for an employer – the payroll process begins many days before. In fact, payroll becomes a responsibility for an employer as soon as employees are hired.
Employers are required by law to withhold payroll taxes from employees’ checks and then remit tax payments to the proper agencies. Employers must also pay their share of payroll taxes on top of the employee portion. In addition, employers must also file payroll reports at the end of each quarter, and again at the end of the year.
Corporate officers of an S-Corporation are considered employees for tax purposes. Any compensation given to the officer is therefore to be considered wages and not a distribution. These wages are then subject to FICA, FUTA, and Federal income tax withholding. In relation to the wage requirement, officers must receive a “reasonable salary”. While there is no specific definition of what a reasonable salary is, generally it must be set in proportion to the services an officer provides.
Filling out and submitting each report requires a great deal of accuracy and familiarity with the quarter’s payroll activity, as well as a thorough understanding of payroll compliance and tax code. Because of the complicated and ever-changing nature of payroll taxation and compliance requirements, as well as differing state regulations, many companies outsource payroll needs. It costs less than hiring an in-house HR representative and purchasing payroll software licensing. Stress is reduced further for employers when they don’t have to handle special payroll situations, such as tipped employee compensation, deductions, garnishments and other variables.
For all your payroll problems, we have a solution. That solution is CamPay. We are here to focus on your payroll needs so you don't have to. To learn more about how choosing CamPay will help your business, visit www.campayaz.com or call us directly at (480) 699-5550.