The Payroll Book

Preface ix

How to Use this Book ix

Icons Used x

Part I: Payroll Setup

Chapter 1: Business Entity 3

Corporation 3

Partnership 5

Sole Proprietorship 6

Limited Liability Company (LLC) 7

Chapter 2: Employees and Nonemployees 9

You 9

Family Members 9

Employees Versus Independent Contractors 12

Statutory Employees and Statutory Nonemployees 19

Children 21

Volunteers 21

Interns 22

Religious Workers 24

Chapter 3: Earnings 25

Salary 25

Executive Exemption 33

Administrative Exemption 33

Professional Exemption 34

Highly Compensated Employees 36

Additional Guidance 37

When an Employer May Make Deductions from Salary Payroll 37

Hourly Wage 38

Basic Provisions/Requirements 39

Piecework 51

Training Wage 51

Subminimum Wage Provisions 53

Other Payroll Categories 54

Chapter 4: Deductions 63

Voluntary Deductions 63

Involuntary Deductions 68

Pre-tax Deductions 87

Chapter 5: Taxes 95

Tax Numbers 96

Employee Taxes 97

Chapter 6: Tax Penalties 123

Chapter 7: Workweek, Pay Period, Payday 129

Workweek 129

Pay Frequency (Pay Period) 130

Payday 131

Chapter 8: The Law 133

Federal 133

FMLA (Family Medical Leave Act) 140

Affordable Care Act 145

New Hire Reporting 146

Labor Posters 151

Davis-Bacon and Walsh-Healy 155

The Equal Pay Act (EPA) 156

Part II: Running a Payroll

Chapter 9: Collecting Time 161

Time Clocks 161

Timesheets 165

Salaried Employees' Time 165

Chapter 10: Calculating Payroll 167

Calculate Earnings Hourly 167

Overtime If a Staff Member Works Different Positions at Different Rates 169

Additions to Earnings 170

Reductions to Earnings 171

Chapter 11: Paying Your Employee 177

Method of Payment 177

Wages for Deceased Employees 184

Chapter 12: Taxes Depositing and Filing 187

Part III: Additional Essential Components

Chapter 13: Record keeping 191

Internal Revenue Service 192

Department of Labor 192

Family and Medical Leave Act (If You Have 50 Employees or More) 193

Title VII of the Civil Rights Act of 1964 and the Americans with Disability Act of 1990 193

The Age Discrimination in Employment Act of 1967 194

The Immigration Reform and Control Act 194

Payroll and Direct Deposit Records in General 195

Employee Handbook/Policy Manual 195

Medical Insurance 195

Chapter 14: Workers' Compensation Insurance 197

What is Workers' Compensation Insurance? 197

Monopolistic States versus Nonmonopolistic Workers' Comp States 200

Cost of Workers' Comp Coverage 200

Chapter 15: Payroll Security and Internal Controls 207

Manuals and Procedures 207

Who Are You Hiring? 209

Internal Controls 219

Disaster Recovery 221

Form 944 222

Chapter 16: US Citizens Abroad, Resident and Nonresident Aliens, and Illegal Aliens 223

Nonresident Alien Services Performed Outside the United States 224

Paying Nonresident Aliens Inside the United States 224

Exceptions to Mandatory Withholding of FIT on Nonresident Aliens 226

Paying Illegal Aliens 226

Chapter 17: Other Issues 231

Professional Employer Organization (PEO) 231

Human Resource Management or HR 235

Escheat 235

Technology/Outsourcing 237

Federal Laws Based on the Number of Employees 238

The Employee Handbook/Policy Manual 242

Conclusion 251

Appendix: Payroll Tax Calender 253

Glossary 255

Index 285