Heather Landau

Form 941 is a quarterly tax form that tracks FICA (Social Security and Medicare) payments made by employers throughout the year. Employer FICA tax payments (6.2% for Social Security and 1.45% for Medicare) are typically due monthly or semiweekly, and Form 941 is due quarterly. Since filling out the Form 941 can be time-consuming and confusing, let’s go through each of the sections and cover what you need to do. Once complete, filing your tax return electronically is the easiest route, but if you prefer to mail it in, check out our mailing address by state table further down in the article. 1. General Information & Form 941 Reporting Period In the top section of the form, you will provide general information about your business such as business name, tax ID, and mailing address. You will also indicate the quarter for which you are filing the return. 2. Form 941 Part 1, Lines 1 Through 15 3. Form 941 Part 2, Line 16 In this section, you must select the type of depositor you were for the quarter (monthly or semiweekly). If you were a monthly depositor, you will enter the FUTA tax liability for each month. If you were a semiweekly depositor, you must also complete Schedule B. 4. Form 941 Part 3, Lines 17 & 18 If your business closed during the year or you let all of your employees go, you need to indicate the date you closed your business and/or stopped paying wages to employees. In addition, if you are a seasonal employer that does not have to file a quarterly 941 form, you need to indicate that information in this section as well. Lines 19-28 are specific to organizations with qualified health plans or qualified leave wages. If this does not pertain to you, then you can skip ahead to part 4. 5. Form 941 Part 4 According to the Form 941 instructions, you can give permission for the IRS to speak to someone about this form on your behalf. For example, you could put your CPA as a third-party designee. Be sure to include their complete name and telephone number. If you don’t want to designate anyone, you can select no. 6. Form 941 Part 5 In this section, you will sign and date Form 941 indicating that you agree with the information that has been included on this form and that, to your knowledge, it is accurate. Form 941 Basics: Who, When & Where As an employer, you are required to withhold taxes from your employees’ paychecks. Generally, these taxes include income taxes, Social Security, and Medicare taxes. The IRS requires that you report these taxes quarterly on Form 941. The employer’s share of FICA taxes is reported on Form 941 along with the employee’s share. You must use Form 941 to report the following: Wages you paid to your employees Tips your employees reported to you Federal income tax you withheld from employees’ paychecks Both employee and employer share of Social Security and Medicare taxes When To File Form 941 The due date to file Form 941 is the same for all employers, regardless of whether you are a monthly or semiweekly depositor of FICA taxes. Form 941 is due on the last day of the month that follows the end of the quarter. If the due date falls on a weekend or holiday, the due date is the next business day. You will submit Form 941 four times per year. Below you will find a summary table of the due dates for Form 941: Where To Mail Form 941 The best way to file tax forms is to use e-file. This service, offered by the IRS, allows you to file your tax returns electronically for free. Filing your tax return electronically will ensure that it is received on time. If you prefer to mail in your tax forms instead, the state you live in will determine where your tax return is mailed. Refer to the table below for the address to mail your Form 941 return. Remember that information may change, and it’s always best to verify the mailing address before sending anything. Form 941 Mailing Address by State Form 941 Late Filings Failure to file Form 941 and/or make your tax payments by the due date will result in penalties and interest. In general, penalties are typically a one-time payment, but interest will continue to accrue until your tax payment is made. If you don’t file Form 941 on time, you could be subject to the following penalties and interest. Bottom Line As you can see, there is a lot that goes into reporting Social Security, Medicare, and federal income taxes for both you as an employer and your employees. By following these instructions to file and pay your payroll taxes you can avoid penalties and the headache of IRS notices. If you’d rather not manually fill out Form 941, consider using a payroll software like . Gusto will automatically pay FICA taxes and complete all payroll form filings on your behalf, so you don’t have to worry about doing it yourself. Check them out for a free 30-day trial.

Processing payroll in Oregon is more complex than in some states because some municipalities levy local taxes, adding a layer of complexity to your work. Oregon also has state-specific forms, so you need to pay close attention to new hires and ensure you’re giving them federal and state forms. However, you don’t have to try to remember it all. The best way to avoid costly fines is to use an all-in-one HR software. We recommend because it monitors tax laws to ensure total compliance for your organization. It then calculates all your taxes and submits your tax forms and payments automatically. Get 50% off Payroll Software for 3 months. Step-by-Step Guide to Running Payroll in Oregon Running payroll in Oregon requires your full attention to make sure you don’t miss any steps and face costly government fines. Here are your basic steps for running payroll in Oregon. Step 1: Set up your business as an employer. If your company doesn’t already have one, you need to get a Federal Employer Identification Number (FEIN). This simple process can be completed online via Electronic Federal Tax Payment System (EFTPS). Your FEIN is required to pay federal taxes. Step 2: Register with Oregon. If your business is new, you need to register with the Oregon Secretary of State’s Oregon Business Registry. Some cities and counties also require that you register with them directly. You can search your business location to see if your company is subject to local registration. Any company that pays employees in Oregon must register with the Oregon Department of Revenue. The state also provides a startup toolkit with information and links to help you move through the steps. Step 3: Create your payroll process. An established business may have a payroll process you inherit. If it does, or if your company is brand-new, you may want to make some adjustments to the process to help you streamline your steps. Overall, you can opt to do payroll yourself manually (not recommended), set up an Excel payroll template, or sign up for a payroll service to help you handle your payroll. Step 4: Have employees fill out relevant forms. During the onboarding of new hires, you must collect certain federal and state forms from your employees. Every employee must complete I-9 verification within the first three days on the job. New employees must also have a completed W-4 on file. The state also requires employees to complete Oregon Form OR-W-4. Step 5: Review and approve timesheets. Your payroll processing will begin several days before your payroll is due when you collect and review time sheets for your employees. Starting a few days early allows you to spot and address any issues and concerns in a timely manner. Whether you use paper time sheets or time and attendance software, it's important to review time sheets for accuracy. If your company uses paper time sheets, have your employees sign them before they submit them to you. That is verification that they agree to be paid based on the hours listed, and you do not have to try to chase them down later for verification. The benefit of using an electronic system is that there’s a built-in function to have your employees digitally sign their time sheets. Step 6: Calculate employee gross pay and taxes. This is where things get complicated if you’re using pen and paper or manual spreadsheets to run payroll. Using payroll software would help standardize this process and make sure you don’t miss any steps or make any inaccurate calculations. You can also follow our guide on how to calculate payroll for good measure. Oregon has one of the highest income taxes in the country—plus, some localities also levy taxes. The state’s tax is progressive, so the higher an employee’s salary, the higher the tax burden. Making these calculations by hand will be complex and may lead to costly mistakes. Payroll software can eliminate these mistakes. Step 7: Pay employee wages, benefits, and taxes. The vast majority of companies and employees use direct deposit, but cash (not the best way) and paper checks are also options. Make sure you are paying your employees at least the Oregon minimum wage, which increases every year July 1 and varies based on where employees work (more detail on minimum wage further down). You can pay your federal and Oregon state taxes online. If you use a benefits provider, it should work with you to make deductions simple, automatic, and electronic. Step 8: Save your payroll records. As with any business record, you want to ensure you keep a copy for at least several years. Oregon law requires companies to keep time sheets or time records for at least two years and all other payroll records for at least three years. These records may be kept electronically, so using payroll software will save you file cabinet space. Step 9: File payroll taxes with the federal and state government. All Oregon state taxes must be paid to the applicable state agency on the schedule provided (usually quarterly), which you can do online at the Oregon Department of Revenue website. To pay federal taxes, you can make those payments online using the EFTPS on one of the following two schedules: Monthly: When the IRS assigns you a monthly schedule, you need to deposit employment taxes on payments made during a calendar month by the 15th of the following month Semiweekly: When the IRS assigns you a semiweekly schedule, you must deposit employment taxes for payments made Wednesday, Thursday, and Friday by the following Wednesday, and for payments made Saturday, Sunday, Monday, and Tuesday, by the next Friday Please note that reporting schedules and depositing employment taxes are different. Regardless of the payment schedule that you are on, you only report taxes quarterly on Form 941 or annually on Form 944. Step 10: Complete year-end payroll reports. Every year, you will need to complete payroll reports, including all W-2 forms and 1099 forms. These forms must be in the hands of employees and contractors no later than Jan. 31 of the following year. Download our free checklist to help you stay on track while working through these steps: Oregon Payroll Laws, Taxes & Regulations Oregon mirrors federal regulations. To ensure that you maintain compliance with payroll regulations, review the ins and outs of doing payroll in Oregon below and consult with an employment law expert in your area. Oregon Taxes With few exceptions, most employers in the US must pay Federal Insurance Contributions Act (FICA) taxes. The current FICA tax rate for Social Security is 6.2% and 1.45% for Medicare. Beyond federal taxes, Oregon levies state taxes on businesses and employees. Some localities also levy taxes. Employer Unemployment Taxes All businesses in Oregon must pay State Unemployment Tax Act (SUTA) taxes. The current wage base is $43,800, and rates range from 1.2% to 5.4%. New employers have a standard rate of 2.6%. Businesses that pay SUTA in full and timely can claim a tax credit of up to 5.4% on your Federal Unemployment Tax Act (FUTA) taxes. Workers’ Compensation Oregon businesses with one or more employees must carry workers’ compensation insurance. Workers’ comp premiums will vary depending on the industry in which your company operates. Exceptions to this requirement include: Sole proprietors Casual labor (less than $500 in monthly payroll) Domestic workers Workers who live out of state Income Taxes Oregon employees who work out-of-state may get a tax credit for taxes paid outside of Oregon. If an employee lives in Oregon but works in another state, then they can receive a tax credit in Oregon for the taxes paid on their income in the other state—but only if that state does not provide a credit of its own. For employees who live in Multnomah County or reside elsewhere and work in the county, they are subject to a 1.5% tax if they earn over $125,000 as an individual or $200,000 as a couple. On Jan. 1, 2026, this rate will increase to 2.3% for employees earning over $250,000 as an individual or $400,000 as a couple. This tax funds preschool services in Multnomah County. Oregon also levies a transit tax statewide. The tax is 0.001% or $1 for every $1,000 in wages and applies to both Oregon residents and nonresidents who work in the state. There is another Oregon tax that helps fund TriMet, the public transit system in the Portland area. The tax rate is currently 0.7837% of wages paid by an employer for work performed within the TriMet boundary. You can check TriMet’s interactive map to see if your business is within the boundary. Oregon Minimum Wage Oregon’s minimum wage is complicated. Not only does the minimum wage go up each year July 1 based on the Consumer Price Index inflation rate, but different areas of the state have different minimum wage rates too. To make matters more confusing, if an employee works across multiple minimum wage zones, the employer must pay the minimum wage rate where the employee conducts the majority of their work. An important note for tipped employees: Oregon law does not allow for tip credits, so employers of tipped workers cannot count the employee’s tips against the minimum wage. You can find more information on Oregon’s minimum wage website. Calculating Overtime Unlike some other states, Oregon's overtime regulations are fairly straightforward. If you have employees eligible for overtime pay, you must calculate their overtime as 1.5 times their regular rate. An employee is eligible for overtime if they have worked over 40 hours in a workweek. To help ensure your overtime calculations are accurate, use our overtime calculator to verify: Paying Employees Oregon law is less strict than most other states when it comes to pay frequency. It requires that employers pay employees at least once every 35 days regularly. Oregon also provides several options for paying your employees: cash, paper check, and direct deposit. Pay Stub Laws Oregon law mandates that you provide employees an itemized pay stub detailing the wages paid, deductions, and purpose of deductions. The pay stub can be a part of the paycheck or a separate document, delivered either by hand on paper, via email, or through payroll software. Oregon Paycheck Deductions Besides the deductions listed above, Oregon law requires that employees consent in writing to any additional deductions. Employers can only withhold additional amounts for: Collective bargaining agreements Repayment of a loan to the employee Any other deduction authorized by the employee, so long as the company is not the recipient Terminated Employee’s Final Paychecks Oregon provides different rules for paying final pay to an employee based on the type of departure from your company and the notice given. Oregon HR Laws That Affect Payroll Many of Oregon’s HR laws go beyond federal minimum guidelines, so pay close attention to the distinctions to keep your business out of hot water. Oregon New Hire Reporting Your business must complete an Oregon New Hire Reporting Form for each new employee. This is used to enforce child support orders and must include the employee’s name, address, and Social Security number. Breaks Meal Breaks Companies must provide employees with at least one 30-minute unpaid and uninterrupted meal break when the employee’s scheduled shift is more than eight hours. If an employee is required to work during their meal break, the entire break must be paid, even if the employee only worked a portion of the break. Oregon also mandates when the employee should take a meal break: If an employee works seven hours or less, their meal break must start no earlier than their second hour of work and end no later than the end of their fifth hour of work If an employee works over seven hours, the meal break must start no earlier than the end of their third hour of work and end no later than the end of their sixth hour of work Tipped employees can waive their meal break if the following conditions exist: The employee is paid to serve food and drink, receives tips, and reports tips to their employer The employee is at least 18-years-old The employee has worked for the employer for at least seven days The employee has signed a waiver form The employer retains the waiver form for at least six months after the employee no longer works for the employer The employer provides a reasonable opportunity for the employee to eat at any time during their shift The employer pays the employee for any meal breaks The employer does not coerce the employee to waive their right to a meal break Rest Breaks Oregon mandates employers provide employees with two paid 10-minute breaks for every eight hours of work. If an employee is under the age of 18, the breaks must be 15 minutes for every four hours worked. Lactation Breaks Employers should provide nursing mothers reasonable breaks as needed to express milk. They are also required to provide a space that isn’t a bathroom. These breaks are unpaid, but an exception is if a nonexempt employee takes their lactation break during a paid rest period. Time Off & Leave Requirements Family Leave Oregon follows the Family and Medical Leave Act (FMLA). The Oregon Family Leave Act (OFLA) protects workers who need to take leave for a covered reason. The leave under the OFLA does not have to be paid, though it can be. Paid family leave is scheduled to be provided in Oregon in January 2023, though that date may get pushed to later in the year. To be eligible for OFLA, an employee must have worked an average of 25 hours per week for 180 days before the leave, and your company must employ at least 25 workers. Under OFLA, employees can take protected leave for the following reasons: Parental leave Serious health condition of the employee or family member Pregnancy leave Sick child leave Military family leave Bereavement leave Paid Time Off Oregon does not require employers to provide employees with paid vacation leave. Employers may create a policy if they wish. Paid Sick Leave The state does, however, require that employers with 10 or more employees—or six or more in Portland—provide paid sick leave. Employers with fewer than 10 employees must provide sick leave, but it can be unpaid. There is no minimum amount of sick leave required. If you need help calculating your PTO accrual, use our free PTO calculator: Voting Leave Oregon has no requirement for employee voting leave. Bereavement Leave Oregon requires any employer with 25 or more employees to give paid bereavement leave, per the OFLA. Employers with fewer than 25 employees are not required to provide any bereavement leave, paid or unpaid. Oregon Child Labor Laws Oregon generally follows the Fair Labor Standards Act (FLSA) child labor laws. Under the FLSA, there are restrictions for workers under the age of 18. Oregon allows for people as young as 14 to work up to eight hours per day and 40 hours per week. Stricter limitations exist around school days, where children ages 14 and 15 can work only from 7 a.m. to 7 p.m. and cannot work more than three hours per day and 18 hours per week. Children ages 16 and 17 can work up to 44 hours per week, regardless of whether school is in session. Oregon Payroll Forms Payroll forms can vary from state to state, and some have their own W-4, like Oregon. Fortunately, that’s the only one: OR-W-4: Employee withholding form Federal Payroll Forms Here is a complete list and location of all the federal payroll forms you should need. W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state income taxes W-2 Form: Used to report total annual wages for each employee W-3 Form: Used to report total annual wages for all employees Form 940: To calculate and report unemployment taxes due to the IRS Form 941: Used to file quarterly income tax Form 944: Used to file annual income tax 1099 Forms: Provides information for non-employee contract work Oregon Payroll Tax Resources Oregon Department of Revenue provides many forms, information on the latest laws and regulations, and other employer-specific information. Tax withholdings often trip up employees processing payroll; reviewing Oregon’s comprehensive information may help you. For extensive information on how to get workers’ compensation coverage, Oregon’s Department of Labor offers guidance. Bottom Line Learning how to do payroll in Oregon can be more complex than for most states—but handling it is still simpler than in states like California. There is only one state-specific form, but there are multiple taxes you need to pay attention to.

As you learn how to do payroll in New Mexico, you’ll find that labor laws for hours, time off, and overtime closely align with federal regulations—so you won’t have to deal with as many headaches as employers in some states do. Employers are required to pay state income tax withholdings monthly and state unemployment insurance (SUTA) every quarter. New Mexico also requires you to find a private insurer for workers' compensation, which is common in most states. While New Mexico’s payroll and tax system isn’t especially complicated, payroll software that handles tax filing can make things easier while keeping you compliant with wage and labor laws. We recommend because it tracks payroll and tax laws for all 50 states and lets you pay employees by check or direct deposit. Sign up today and get 50% off for 3 months. Running Payroll in New Mexico: Step-by-Step Instructions Step 1: Set up your business as an employer. To comply with federal law, you need your employer ID number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS). Step 2: Register with New Mexico state. To pay state income tax withholdings. Register for an account with the New Mexico Taxpayer Access Point. This is also where you register your business and receive your taxation number, known as the CRS. Alternatively, you can fill out and submit an ACD-31015 at your local tax office. To pay SUTA, register for an account with the New Mexico Department of Workforce Solutions. You’ll need your business information, including the date your employees first performed services in New Mexico, gross quarterly summary of wages paid, and description of services. Once registered, you will get an Employer Account Number (EAN) and access to the Unemployment Insurance (UI) Tax System. Step 3: Set up your payroll. Create a set schedule of paydays that are at least twice a month (except for executives and supervisors, who can be monthly). Creating a payroll schedule will require you to have a payroll process already in place. If you don’t, learn how to set up payroll yourself in our helpful guide. Step 4: Collect employee payroll forms. Payroll forms are best filled out during employee onboarding. Forms include W-4, I-9, and a direct deposit authorization form. New Mexico does not have a state W-4. Step 5: Collect, review, and approve time sheets. Be sure to accurately account for overtime. Time sheet templates or time clocks can help employees efficiently track their hours. Step 6: Calculate payroll and pay employees. You can use payroll software, a calculator, or even an Excel template to calculate payroll. Step 7: File payroll taxes with the federal and New Mexico state government. Follow the IRS instructions for federal taxes, including unemployment. You’ll report using the Wage Withholding Tax Return Form WWT-1. You can file New Mexico taxes and unemployment insurance online, as well, using the Taxpayer Access Point e-filing portal. You’ll just need your state tax ID number and PIN. New Mexico Income Taxes: New Mexico withholdings are paid on the 25th of the month following the end of a reporting period, unless the 25th is Saturday, Sunday, or legal holiday. Then it is due the next business day. SUTA: You must file online and pay via automated clearing house (ACH) debit. If the due date for a report or tax payment falls Saturday or Sunday, reports and payments are considered on time if they are received on or before the following business day. Step 8. Document and store your payroll records. New Mexico requires you to keep records on employees for at least one year. Information should include contact and payroll information about the employer and employee. See the paystub requirements below and learn more in our article on retaining payroll records. Step 9. Do year-end payroll tax reports. Send the federal Forms W-2 (for employees) and 1099 (for contractors). You also need to submit the state copy of the W-2 to New Mexico. You can file the Form RPD-41072, Annual Summary of Withholding Tax, but it is not required unless you underpaid or overpaid monthly withholdings. Download our free checklist to help you stay on track while you’re working through these steps: New Mexico Payroll Laws, Taxes & Regulations No matter what state you are in, you must maintain compliance with payroll regulations and follow federal law on withholding money from employee paychecks for income taxes, Social Security (6.2% from each employee paycheck and a matching 6.2% from your bank account), Medicare (1.45% from each employee paycheck and a matching 1.45% from your bank account), and federal unemployment insurance (6% of each employee’s first $7,000 earned). Learn more in our article on federal and state payroll tax rates. New Mexico Taxes New Mexico has state income taxes, but no particular local income taxes. It charges unemployment insurance taxes. Companies hiring more than three employees also need to get workers' compensation insurance unless they have over 100 employees and are large enough to self-insure. State Income Taxes If you withhold federal income taxes for an employee, then you must also withhold state income taxes. This includes agricultural workers under some conditions. However, Native Americans who are members of a New Mexico federally recognized Indian nation, tribe, or pueblo and who live on the lands where they are enrolled are exempt. New Mexico charges income tax rates from 1.7% to 5.9%. All income is taxed, and rates depend on filing status and annual income. You can find New Mexico’s current rates and other information on filing by checking out the 2022 New Mexico Withholding Tax document the state released. Unemployment Insurance New Mexico charges SUTA; if you have employees, then you must pay it. In general, you need to pay if you paid an individual $450 or more in any calendar quarter in the current or preceding calendar year, or if you employed one or more persons—including part-time workers—in each of 20 different calendar weeks of the current or previous calendar year. There are different rules for farm, domestic, and nonprofit organizations. The SUTA is based on a taxable wage base of $27,000. SUTA rates run from 0.33% to 5.4% for experienced employers. Rates are calculated and assigned based on your benefit ratio, reserve factor (1.6528 for 2021 and determined by Unemployment Trust Fund solvency), and experience history factor. If that number exceeds 5.4%, you will add an excess claims rate, which is a pre-adjusted contribution rate minus 5.4%, then multiplied by 10%. The excess claims rate cannot be higher than 1%. New employers are charged at their industry average or 1%, whichever is greater. You can find the industry rates and a full explanation of how experienced rates are calculated on the New Mexico Department of Workforce Solutions Website. . Workers’ Compensation Insurance If you are a New Mexico business and have three or more employees anywhere in the US with at least one working in New Mexico, you need New Mexico workers' compensation insurance. If you do work requiring licenses by the Construction Industries Licensing Act, you must have workers' compensation coverage, even if you have fewer than three employees. There are three types of coverage: conventional (for most businesses); assigned risk pool (for those in high-risk industries); and self-insurance (for larger, qualifying companies). You get workers’ comp insurance from a qualified insurance broker. Minimum Wage Laws in New Mexico Like many states, New Mexico is raising the minimum wage, although it has not posted rate increases past 2023. In 2022, the hourly minimum wage rose to $11.50, or $2.80 for tipped employees. For 2023, these amounts will rise again to $12 for standard employees and $3 for tipped employees. The rates for minors in training or student work-study have not been published. Some counties and cities have different rates. Where there is conflict, such as for tipped employees, defer to the highest rate. Cities do not list different rates for students or work-study. There are some exemptions: Minors under 18 Individuals employed in a bona fide executive, administrative or professional capacity and forepersons, superintendents, and supervisors An individual engaged in the activities of an educational, charitable, religious, or nonprofit organization where there’s no employer-employee relationship such as for volunteers Salespersons or employees compensated upon piecework, flat rate schedules, or commission basis Registered apprentices and learners otherwise provided by law Seasonal employees of an educational, charitable, or religious youth camp or retreat who are furnished room and board in connection with such employment Any agricultural worker who is a family member, is paid on a piece-rate basis, or whose employer did not, during any calendar quarter during the preceding calendar year, use more than 500 person-days of agricultural labor New Mexico Overtime Regulations New Mexico requires overtime pay of no less than 1.5 times the regular applicable minimum wage rate. Overtime counts as any hours over 40 in a week. In addition, hotels, restaurants, or cafes shall not make employees work more than 10 hours in a 24-hour period or 70 hours in a seven-day period. The law specifically states male employees, but you should apply this rule for all workers. You must keep time records for employees. Firemen, law enforcement officers, or farm or ranch hands whose duties require them to work longer hours, or employees primarily in a standby position, may not be required to work more than 16 hours in any 24-hour period except in emergencies. Different Ways To Pay Employees New Mexico lets you pay employees by cash or check, or direct deposit if agreed upon by the employer and employee. Payroll vouchers also work if they can be converted to cash at full value. Pay Stub Laws New Mexico requires you to provide a written or printed statement detailing the employee’s pay information. Statements must include employee and employer, gross pay, number of hours worked, total wages and benefits, and an itemized listing of deductions. These records must be kept by the employer for a year. Minimum Pay Frequency Employees in New Mexico must designate paydays of no more than 16 days apart, usually for the 16th and end of the month. There are exceptions for executives, professionals, supervisors, outside salespersons, and others as defined in the federal Fair Labor Standards Act. These exceptions may be paid once per month. Paycheck Deduction Rules New Mexico employers may make deductions for cash shortages, damage or loss of employer property, uniforms, required tools, or other items necessary for employment. They may also create deductions that are permitted by law or that employees have consented to in writing such as for benefits or retirement. Final Paycheck Laws When you fire or lay off an employee, you must pay all wages within five days of discharge if the wages are fixed. If they are based on a task, piece, or commission basis, you must pay within 10 days. Accrued Time Off You are not required to provide paid or unpaid vacation benefits to employees. New Mexico also does not require you to provide holiday leave or premium pay on holidays unless the time worked qualifies as overtime. However, if you do so, you should provide an agreement in writing and adhere to it. New Mexico HR Laws That Affect Payroll New Mexico labor laws are relatively basic and not much different from federal law. When the two differ, be sure to meet the needs of both. New Mexico New Hire Reporting Employers must report new hires or rehires within 20 days, per federal law. Do this at the New Mexico New Hire Directory. You will need your EIN and contact information and the employee’s information, including Social Security number and date of hire. You can report electronically, by mail to the New Mexico New Hire Directory at P.O. Box 2999, Mercerville, NJ 08690, or by fax at (888) 878-1614. If you submit reports electronically, do so in two monthly transmissions not more than 16 days apart. There is no need to report if there are no new hires since the last report. Paid Sick Leave & Caregiver Leave New Mexico does not require employers to provide paid sick leave, but they must provide unpaid sick leave in accordance with the Family and Medical Leave Act or other federal laws. If you provide sick leaves to an employee, then by The Caregiver Leave Act, you must allow the employee to use that same leave to care for their family members under the same terms. You cannot discharge, threaten to discharge, or retaliate against an employee who uses their leave. Voting Leave New Mexico law allows employees two hours of leave to vote if their workday begins two hours before voting begins and ends less than three hours before the polls close. Employers can set up the time for leave to vote. Lunch & Other Break Time Requirements You are not required to give lunch or other breaks. However, if you do give breaks of less than 30 minutes, you cannot deduct pay for them. You don’t need to pay for lunch or long breaks if the employee is free to do whatever they like during the break. Hiring Minors Children 14 and 15 need a work permit to work in New Mexico. During the school year, they cannot work between 7 p.m. and 7 a.m. Outside the school year, the hours are reduced to between 9 p.m. and 7 a.m. They also cannot work during school hours or more than three hours per day or 18 hours per week. They cannot work around heavy machinery, explosives, electrical hazards, door-to-door sales, or other similarly dangerous jobs as listed in New Mexico Statutes Chapter 50, Article 6. There are exceptions for children in film or TV productions. New Mexico Payroll Forms New Mexico prefers that you pay and file forms online. The state website has several dead links, but you can get these forms at your district office. Your payroll software may also have them in fillable PDF. New Mexico State W-4 Form New Mexico does not have a state withholding form. You should use the withholding information on the employee’s federal W-4 with the withholding tables for New Mexico to determine how much to withhold for each paycheck. Other Payroll and Tax Forms ES802 (A, B, C, and O): These forms let you opt to become liable for payments instead of contributing to unemployment insurance and to submit surety bonds or certificates. Form ACD-31015, Business Tax Registration Form: This form is for changing your business address or canceling your CRS number. WWT-PV Wage Withholding Tax Payment Voucher: To pay withholdings if you are not paying online, use this form. Federal Payroll Forms W-4 Form: To help employers calculate taxes to withhold from employee paychecks W-2 Form: Reporting total annual wages earned (one per employee) W-3 Form: Reports total wages and taxes for all employees Form 940: Reports and calculate unemployment taxes due to the IRS Form 941: Filing quarterly income and FICA taxes withheld from paychecks Form 944: Reporting annual income and FICA taxes withheld from paychecks 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work For a more detailed discussion of federal forms, check out our guide on federal payroll forms you may need. New Mexico Payroll Tax Resources/Sources New Mexico Tax Website: Get the forms and information and pay online here. New Mexico Department of Workforce Solutions: Where you can learn about unemployment, UI taxes, child labor laws, and more. New Mexico Employer Guidebook (Workers' Comp): This downloadable PDF has all the information you need about workers' compensation. FYI Form 104: New Mexico tax laws and tables. Wage Withholding Tax Return: All the information you need on withholdings. Bottom Line New Mexico has fewer labor regulations than many states, but it does charge state income taxes and SUTA and requires you to purchase workers’ compensation insurance. It pays to know the regulations and ensure you adhere to them. You can do this on your own, but a good payroll software like Rippling that tracks New Mexico payroll regulations can make the process easier, plus keep up with changes on tax and SUTA rates.

For employers, understanding the difference between IRS Forms W-9 vs 1099 can be a bit confusing. Form W-9 is used to gather information about a contractor (like name and address) so their earnings can be reported at year-end. It is generally filled out when you first begin working with a contractor. Meanwhile, Form 1099 (1099-NEC) is the income-reporting document sent to contractors at year-end (no later than the following Jan. 31), if they earned $600 or more, so they can report and pay taxes on the earnings you paid them. A copy must also be sent to the IRS. As a small business, collecting W-9s and filing 1099s can be a payroll nightmare, especially if you’re managing multiple contractors. , a payroll software, makes it easy for 1099 workers to enter W-9 information through a self-service portal—no paper required. It also automatically files your 1099s and sends them to both your contractors and the IRS. Sign up for a free trial of Gusto to start paying your independent contractors today. What Is the W-9 Form? Form W-9, Request for Taxpayer Identification Number and Certification, is an IRS document used to gather data your business needs to report to the IRS at year-end. Since IRS forms change, your best option is to use the IRS website as your primary source for any IRS tax forms or instructions. You’ll find detailed directions there to help your contractors complete the form correctly. Download Form W-9 Once your contractor completes the W-9, keep a copy of it on file in case you’re ever audited. The completed and signed document demonstrates that you gathered the correct data for the taxpayer. The IRS does not need a copy of this document. What Is the 1099-NEC Form? The 1099-NEC is an IRS document that’s used to report all kinds of income such as that received by an independent contractor for work provided to a business or private employer. It is similar to an employee’s year-end W-2 but used by businesses that pay non-employee contractors such as freelancers or contract workers. Typically, you should use a 1099-NEC to report payments made to a contractor who earns $600 or more in a tax year. However, there are a few other scenarios in which a 1099-NEC is needed such as: Report crop insurance proceeds: Money insurance companies pay farmers for crops that are damaged or destroyed Record fishing boat proceeds: For self-employed crew members earning money on a fishing boat or vessel Disclose golden parachute payments: Severance pay, cash bonuses, and stock options given to terminated employees Download Federal Form 1099-NEC Penalties for Not Submitting a 1099 Aside from having to reissue incorrect 1099s, you are subject to penalties if you don’t submit a proper 1099. The IRS increased penalties associated with 1099s in 2022, and, as a result, you could end up paying up to $280 per return if you’re not careful. You can be charged separate penalties for not filing correct 1099 copies with the IRS or for not submitting them to your contract workers. You may incur the following penalties if you fail to file 1099s timely and accurately: If your business averages annual gross receipts of $5 million or less for the three most recent tax years, your maximum penalties are less than penalties the IRS charges larger companies. If you file the reports before the Aug. 1 deadline, you can be charged a maximum per-year fee of $556,500. If you fail to file on or after Aug. 1 or never file them at all, you can be charged a maximum of up to $1.1 million per year. If you intentionally file a fraudulent information return for payments you claim to have made to another person, you may be liable for damages. The person can sue you for up to $5,000 or more in civil damages. Why You Need Tax Forms for Contract Workers When processing payroll for contractors, you’re not required to withhold or pay taxes such as FICA. However, gathering, tracking, and reporting their earnings on the appropriate payroll form is vital because the IRS requires them to pay taxes on their own. Although you’re not responsible for making sure your contract workers pay taxes, you do have the burden of ensuring they receive accurate earnings information by Jan. 31 of the following year to comply; otherwise, you can be penalized. Bottom Line The relationship between a W-9 and 1099 is that the W-9 gathers the data that’s later reported to the IRS on a 1099-NEC for contractors that earn $600 or more in a tax year. A copy of the W-9 is kept in your business files, while copies of the 1099-NEC are provided to the IRS and your contractor. The contractor then uses the 1099 to report their income when filing their taxes. If you’re currently working with 1099 contractors or considering doing so in the near future, consider using . Its system lets contractors submit W-9 information online that transfers to electronic 1099s you’ll send to your contractors and the IRS. Gusto also makes it easy to make direct deposit payments and helps you stay compliant with all federal and state employment laws. Sign up for its contractor-only plan now and get 30 days free. You May Also Like … How to Do Payroll for Small Businesses W2 vs 1099 How to Fill out a W2 Form What is a W4 Form Payroll Tax Rates

Massachusetts has a lot of legislation regarding employee rights, so there are a few things to keep an eye out for. Some major differences include more stringent final pay laws, Massachusetts Blue Laws (restrictions on business openings on Sundays and holidays), a state Paid Family Medical Leave (PFML) program, and a higher minimum wage. If you’d like to make payroll simpler, consider using a payroll software like . It’s programmed with all payroll tax rates and laws, so you don’t have to track changes. It also files and pays your taxes and pays employees with direct deposit or check. Sign up today and get 50% off for 3 months. Running Payroll in Massachusetts: Step-by-Step Instructions Step 1: Set up your business as an employer. For the federal government, you will need your Employer Identification Number (EIN) and an account in the Electronic Federal Tax Payment System (EFTPS). Step 2: Register with the state of Massachusetts. In Massachusetts, you will need to register online with the Department of Revenue. To register you will need the following information: EIN (this number may be the same as your Social Security number if you are a sole proprietor) Your legal name The mailing address of your business The start date of your business If you need assistance registering, the Massachusetts Department of Revenue has a video to help new employers. Step 3. Set up your payroll process. You’ll need to decide how often you’re planning to pay employees, if you need to track work hours, which payroll forms you need to collect and when, how you’ll perform payroll calculations, and so forth. You can opt to do payroll yourself, utilize Excel payroll templates, or sign up for a payroll service. Step 4: Collect employee payroll forms. The best time to collect payroll forms is during your new hire orientation. Federal payroll forms will include W-4, I-9, and direct deposit information. Massachusetts also requires you to submit a Form M-4. Step 5: Collect, review, and approve time sheets. You’ll need to collect time sheets for all hourly employees and nonexempt salaried workers. To do this, you have three options to use: A paper time sheet Free or low-cost time and attendance software A payroll service that has a time and attendance system Step 6: Calculate payroll (including taxes) and pay employees. You will need to calculate payroll tax payments, employee paycheck amounts, paid time off balances, etc. You can choose to pay employees in a number of different ways (i.e., cash, check, direct deposit, pay cards.) Federal taxes should be remitted through the EFTPS. Step 7: File payroll taxes with the federal and state governments. The IRS has forms and instructions on filing federal taxes including unemployment. In addition you can order tax forms from the IRS. Regarding Massachusetts state taxes, you must also report withholding tax based on the following schedule. Massachusetts Payroll Tax Filing Deadlines You can report your taxes online through the MassTaxConnect website. Additionally, you must register with the Department of Unemployment Assistance (DUA) to submit wage and employment reports and pay unemployment insurance contributions. You can use the instructions and user registration guide for help. Step 8: Document and store your payroll records. It is important to retain records for all employees for several years, including those who are no longer with your company. If you need help with which records to keep, please see our article on retaining payroll records. Massachusetts mandates that you keep payroll records for three years. These records must contain the employee’s name, address, job title, amount paid each payroll, and daily/weekly hours worked. Step 9: Do year-end payroll tax reports. The federal forms that are mandated are W-2s (for employees) and 1099s (for contractors). These forms should be given to employees and contractors by Jan. 31 of the following year. State W-2s are also required for Massachusetts and these forms are due by Jan. 31. Download our free checklist to help you stay on track while you’re working through these steps: Massachusetts Payroll Laws, Taxes & Regulations While there are several items relating to payroll taxes, laws, and regulations in Massachusetts that differ from federal regulations, you will be required to remit Social Security and Medicare (known as Federal Insurance Contributions Act, or FICA, taxes) regardless of what state you do payroll in. FICA is 7.65% of the employee’s paycheck—6.2% for Social Security and 1.45% for Medicare. Also, you must withhold the same amount (7.65%) from the employee’s take-home pay. Both amounts are paid to the IRS. Massachusetts also has state income taxes and requirements relating to unemployment insurance, workers’ compensation, minimum pay frequency, and final pay laws. State Taxes You do have to account for state taxes in Massachusetts, but they are relatively simple since it is a flat income tax state. All employees are taxed at 5% regardless of income earned. There is no local income tax in Massachusetts. State Unemployment Insurance (SUTA) The unemployment tax rate in Massachusetts is 2.42% for the first three years of the employers’ existence. After the fourth year, your rate is calculated based on the state’s reserve ratio method, which includes your company’s account balance as well as the current annual rate schedule. Your rate can be anywhere between 0.056% and 18.55%. When you pay SUTA, you may qualify for up to a 5.4% discount on your federal unemployment insurance taxes (FUTA). The FUTA rate is 6.0% on the first $7,000 that is paid to each employee in that year. Workers’ Compensation Insurance You are required by Massachusetts law to provide workers’ compensation insurance for your employees, even if you’re the only employee. The only exception is for domestic workers who work less than 16 hours a week. This insurance covers medical expenses and some lost wages for employees who are injured on the job. The cost of workers’ compensation insurance is around $0.73 for each $100 payroll you processed. For example, a company that processes $250,000 of payroll can expect to pay around $1,825 in insurance. Minimum Wage & Tips Most jobs will require you to pay at least minimum wage with few exceptions. Such exceptions include tipped employees, students, and some agricultural workers. If you need any help with the federal guidelines on exceptions, please review our list of federal minimum wage exemptions. Massachusetts’ minimum wage is one of the highest in the country at $14.25 per hour for non-tipped employees. Tipped employees' minimum wage rate is $6.15 per hour but only if the following conditions apply: They receive $14.25 per hour with tips included They are aware of the law All tips are provided to the employee or to a qualified tipped pool Overtime Massachusetts generally follows federal guidelines on overtime—you must pay employees 1.5 times their regular hourly rate for all hours over 40 worked in a workweek. There are exceptions for certain classes of occupations. Some of these occupations can include “office” employees who earn more than $80/week, agriculture/aquaculture workers, and hospitality workers. All exceptions can be found on the Massachusetts Legislature's website. Massachusetts does not require you to pay overtime if an employee works over eight hours in a day—only if they work over 40 hours in a week. To compute overtime, use our calculator below: Different Ways to Pay Employees In Massachusetts, you are able to pay employees via standard payment options. The law specifically states payment by check or cash, and the government’s website includes direct deposit. While the law does not address payroll through pay cards, Massachusetts currently allows it. No matter which option you choose, the employee should be able to receive their funds without an additional fee. Pay Stub Laws You must provide your employees with a pay stub free of charge that contains the following information: Company’s name Employee’s name Pay date that is expressed by month, day, and year Hours worked during the pay period Hourly rate Pay deductions (i.e., benefit costs) Pay increases (i.e., shift pay) You can provide pay stubs online as long as employees have the option to receive a printed copy of the pay stub for at no cost to them. If you want to create your own pay stubs, use one of our free pay stub templates to help you get started. Minimum Pay Frequency In Massachusetts, you must pay employees in six to seven days after your pay period ends. Whether it is six or seven days depends on how many days they work within a calendar week from Sunday to Saturday. A table explaining the difference is below. For these reasons, you should pay employees weekly or biweekly in Massachusetts. Paycheck Deduction Rules In Massachusetts, you cannot deduct pay from an employee’s check unless it is authorized by state and federal law (i.e., income taxes, Social Security, and Medicare). Deductions that are for the benefit of the employee (i.e., union dues, 401(k) deductions, and medical benefit premiums) can be deducted if the employee consents to it. Other expenses that are directly related to an employee’s job, such as uniforms, supplies, and materials, cannot be deducted even if the employee is in agreement. Final Paycheck Laws If an employee submits a voluntary resignation in Massachusetts, you must pay them on whatever comes first: the next paycheck or by the Saturday after the employee leaves. If an employee is involuntarily terminated in Massachusetts, you must pay the employee on the same day. Massachusetts HR Laws That Affect Payroll Massachusetts is a complex state when it comes to legislation that affects processing payroll. Many of its laws are focused on providing additional resources for workers, like restrictions on hours and enhanced Paid Family Medical Leave. Breaks, Lunches & Time Off Requirements Massachusetts’ time off requirements are more employee-friendly than federal guidelines when considering meal breaks and sick leave. An overview is listed below. Massachusetts Blue Laws Massachusetts Blue Laws is a group of rules that oversee which businesses can operate on Sundays and on certain legal holidays. To get more specific information, please visit the following section on the Massachusetts government website: Massachusetts Blue Laws. A general overview will be provided below. Retail Businesses: Typically speaking, retailers are able to open on Sundays and holidays without approval with the exception of retailers that serve alcohol. For those retailers, you will need to contact the Alcoholic Beverage Control Commission. If your company employs more than seven employees, you must pay a premium rate on Sundays and the following holidays: New Year’s Day, Memorial Day, Juneteenth Independence Day, Independence Day, Labor Day, Columbus Day (after noon), and Veteran’s Day (after 1 p.m.) to those employees who do not fall under the executive, professional, or administration categories. For more information on which employees fit in these categories, please see the article from NOLO on White-Collar Exemptions. In short, it is really designed for your hourly, nonexempt employees. A table with premium rates is listed below. Please continue to follow up with the Massachusetts government for any changes in future years. In addition, most employers cannot mandate that employees work on Sundays or on restricted holidays, and no employer can punish an employee for refusing to work on said days. Nonretail Businesses: Most businesses that are not retail establishments cannot operate on Sundays. For a list of exemptions, please visit the section regarding work Sunday on the Massachusetts Legislative Website. If you have any additional questions, please contact either the Department of Labor Standards Minimum Wage Program and/or the Attorney General’s Fair Labor Division by calling (617) 626-6952 or (617) 727-3465, respectively. State New Hire Reporting Massachusetts requires you to report any new hires within 14 days of the employee’s hire date. You can report new hires online, by mail at P.O. Box 55141, Boston, MA 02205-5141, or by fax at (617) 376-3262. If your business has 25 or more employees, you must report new hires online. Note: If you have employees or contractors in other states, you can also register them with the State of Massachusetts, which will forward it along to the respective agencies in the state in which your employee or contractor works. Payroll Forms Listed below are the state-specific and federal forms you will need for Massachusetts. State Payroll Forms M-4 Form: To assist employers in calculating state taxes to withhold from employee pays New Hire Reporting Form: Reports new employees and independent contractors to the Massachusetts Department of Revenue Federal Payroll Forms W-4 Form: To help employers calculate taxes to withhold from employee paychecks W-2 Form: Reporting total annual wages earned (one per employee) W-3 Form: Reports total wages and taxes for all employees Form 940: Reports and calculate unemployment taxes due to the IRS Form 941: Filing quarterly income and FICA taxes withheld from paychecks Form 944: Reporting annual income and FICA taxes withheld from paychecks 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work State Payroll Tax Resources/Sources State of Massachusetts Business Website: Government website that provides you with registration, other business forms, and the latest news and information Guide: Starting A New Business in Massachusetts: Step-by-step guide on registering your business MassTaxConnect: An online application operated by the Massachusetts Department of Revenue to pay and submit tax information Bottom Line Massachusetts payroll is different from other states due to the number of worker protections that it provides. These examples include its Blue Laws, paid family leave program, mandated workers’ compensation, frequency of payrolls, and final pay laws. Combined with its state income taxes, Massachusetts has many items that you will need to be aware of. Be sure to follow the latest news, deadlines, and mandates by federal, state, and local governments as there may be fines for non-compliance. To ensure that you are compliant on the federal side, please visit our article on payroll compliance.

New Jersey charges state income taxes on all wages. You need to withhold taxes and unemployment insurance quarterly for each employee. In addition, the minimum wage is creeping toward $15 per hour. These are a few of the things you need to know to do payroll in New Jersey. Learn more about payroll tax laws and other rules that affect payroll in the state below. Payroll software that handles tax filing can make things easier and ensures you stay compliant. We recommend . It pays employees by check or direct deposit and tracks payroll and tax laws for all 50 states. Learn more about QuickBooks Payroll and see if it’s right for you. Step-by-Step Instructions for Doing Payroll in New Jersey Step 1: Set up your business as an employer. Get your company’s Federal Employer Identification Number (EIN). If your company is new, you may need to apply for a FEIN. This is a simple process that can be completed online via the Electronic Federal Tax Payment System (EFTPS). If you work for a company that already has one, keep the FEIN handy. The FEIN is required to pay federal taxes. Step 2: Register with New Jersey. Register at the Division of Revenue and Enterprise Services. Once you have your EIN, you need to fill out the certificate of formation and file the tax/employer registration form, NJ-REG. You can do this online. Step 3: Set up your payroll. Create a set schedule of paydays that are at least twice a month (except for executives and supervisors, who can be monthly), and take into account overtime rules as listed below. You can do payroll by hand (although we don’t recommend it), set up an Excel payroll template, or sign up for a payroll software. Step 4: Collect employee payroll forms. These forms are best filled out during employee onboarding. Employee forms include W-4, I-9, and direct deposit information. For New Jersey, employees fill out the NJ W-4. Pennsylvania residents under your employ may need to fill out the NJ-165 to pay taxes in their state only. Step 5: Review time sheets. This step is one you’ll repeat as you do payroll each period. Keeping track of employees’ hours is essential for ensuring accurate payroll. Whether you use paper time sheets or time and attendance software, review time sheets for accuracy and discuss any errors or issues with employees right away. Having employees sign their time sheets is a good idea, whether they do so electronically or by pen on paper. Step 6: Calculate payroll and pay employees. You can use software, a calculator, or even Excel to calculate payroll. Step 7: File payroll taxes with the federal and New Jersey state government. Follow the IRS instructions for federal taxes, including unemployment. To file New Jersey taxes and unemployment insurance, you’ll file online here. You need your state tax ID number and PIN. New Jersey Income Taxes: New Jersey state taxes are due April 30, July 30, Oct. 30, and Jan. 30. Fill out and file the NJ-W3 and submit with the IRS W-2 and 1099. State Unemployment Insurance (SUTA): Employers must file the Forms NJ-927 and WR-30 by the following dates: If the due date for a report or tax payment falls Saturday or Sunday, reports and payments are considered on time if they are received on or before the following business day. Step 8. Document and store your payroll records. New Jersey requires you to keep records on employees for at least six years. Information should include contact information, hours worked and pay, itemized deductions, and the birthdate of the employee if under 18. Learn more in our article on retaining payroll records. Step 9. Do year-end payroll tax reports. Send the federal Forms W-2 (for employees) and 1099 (for contractors). You also need to submit the NJ-W3-G for year-end reporting of gross taxable income. Download our free checklist to help you stay on track while you’re working through these steps: New Jersey Payroll Laws, Taxes & Regulations No matter what state you are in, you must follow federal law for income taxes, Social Security, Medicare, and federal unemployment insurance (FUTA). New Jersey Taxes New Jersey requires you to withhold income and unemployment insurance taxes for all resident and nonresident employees working in the state. It has a reciprocity agreement with Pennsylvania, however. Need help calculating gross pay for your employees (before deducting NJ tax)? State Income Taxes New Jersey requires you to pay income tax withholdings from all state residents unless you’re withholding another jurisdiction’s income tax at a rate equal to or greater than New Jersey’s. You also need to withhold state income taxes for nonresident employees. New Jersey income tax rates are done in classes of seven or eight, depending on your income level. Rates start at 1.4% on wages up to $20,000, and rise to 10.75%. You can find the withholding tables on the state website. You need to file withholdings quarterly. Year-end filings must be done electronically. Reciprocity Agreements New Jersey has reciprocity laws with Pennsylvania. You’ll need to have any employee who is a Pennsylvania resident fill out Form NJ-165. Once filed, you won’t need to withhold New Jersey taxes. Unemployment Insurance New Jersey charges SUTA taxes. If you start a business, employ one or more individuals, and pay wages of over $1,000 in a calendar year, you may be subject to state unemployment tax. There are exceptions for those employing domestic workers or agricultural workers, and some nonprofit organizations. The SUTA is based on a taxable wage base of $39,800. SUTA rates run from 0.5% to 5.8% for experienced employers. Rates are calculated and assigned on a fiscal year (July 1 to June 30) basis. Your experience rate is your reserve balance (contributions paid minus benefits charged) divided by your average annual payroll. New employers are assigned a rate for the first three calendar years, after which, they pay according to their experience rate. In 2022, the rate is 2.8%. In addition, you pay a state disability insurance rate, workforce development/supplemental workforce funds, and family leave insurance. These are usually as little as 0.0005%. Workers’ Compensation Insurance All New Jersey employers not covered by federal programs need to have workers’ compensation insurance or qualify for self-insurance. To self-insure you need to get approval from the Commissioner of the Department of Banking and Insurance. Approval for self-insurance is based upon the financial ability of the employer to meet its obligations under the law and the permanence of the business. Learn more on the workers’ compensation website. Minimum Wage Laws in New Jersey Like many states, New Jersey is slowly moving toward a $15 an hour minimum pay rate. Rates vary depending on the type of job. If you have fewer than six employees, your rate may be lower. Tip-earning employees are expected to make up part of the wage in tips, but there is a minimum you must pay regardless. Farm employees doing piece-rate work must still be paid minimum wage. *TBD: To Be Determined Exemptions include: Full-time students employed by the university they are attending (must earn 85% of minimum wage) Outside salespeople Part-time employees caring for children in the employer’s home Minors under 18 (with exceptions like farming, service industries, light manufacturing, and vocational school graduates) Employees of summer camps, conferences, and retreats operated by nonprofit or religious organizations are exempt from minimum wage and overtime rates from June through September. New Jersey Overtime Regulations Overtime starts for hours in excess of 40 in a workweek and is 1.5 times the employee’s regular wage. There are exemptions for executive, administrative, and professional employees, farmworkers or those caring for livestock, and limousine drivers. Different Ways To Pay Employees Although there are several ways to pay employees, New Jersey lets you pay by cash or check. You need the employee’s consent to pay by direct deposit. Keep in mind, however, that more than 7 million people in the U.S. don’t have a bank account, which means direct deposit does not work for them. Pay Stub Laws You must provide your employees a statement of deductions for each pay period. If you have 10 or more employees, you must also include gross pay, net pay, hours worked, and rate of pay. You also must let them know in advance of changes in pay rates. Minimum Pay Frequency Employees in New Jersey must be paid at least twice a month, except for executives and supervisors, who may be paid monthly. You can set what days you pay, as long as they are regular and determined in advance. If a payday falls on a non-workday, then you need to make payments on the preceding workday. You must pay employees within 10 days of the end of the work period. Paycheck Deduction Rules New Jersey allows for deductions only in specific circumstances and when authorized by contract or collective bargaining agreement: Employee welfare Insurance Hospitalization Pension or retirement funds Profit-sharing plans Company-oriented thrift plans Employee savings accounts Employer loans Purchase of company products or safety equipment Charitable contributions Labor union dues or fees Rental or cleaning of work uniforms Health club memberships Child care Final Paycheck Laws If an employee is fired or leaves, you need to pay them the final paycheck by the next regular payday. The only exception is when there is a labor dispute involving payroll employees, in which case you have an additional 10 days. If employees are on an incentive system, you can pay a reasonable approximation of their wages due until you can make an exact determination. You need to pay through the regular channels or, if requested by the employee, mail them a final paycheck. Accrued Paid Time Off New Jersey has no specific laws concerning paid time off or vacation leave, but they do require paid sick leave (which we cover below). Employers can give employees paid time off or a combination of paid vacation/paid sick leave. The trend is moving back to combination vacation/sick leave. Whichever way you do it, be sure you specify in your employee handbook any rules concerning non-sick leave paid time off, including use-or-lose policies and the ability to sell back leave. Severance In general, New Jersey does not have severance pay laws for firing or laying off individual employees. However, there are rules for mass layoffs. If you have over 100 employees, where those employees work over 20 hours per week, then you must give advance notice of layoffs. When you are terminating employment of over 50 employees (excluding part-time workers), then you must give 90 days’ advance notice. You must also provide severance pay equal to one week of pay for each full year of employment for each worker. This rule does not apply to a worker quitting, retiring, or being fired for cause, such as misconduct. New Jersey HR Laws That Affect Payroll New Jersey’s HR laws are not especially complex, particularly compared to neighboring state New York. However, it does have strict fines and penalties for noncompliance. New Jersey New Hire Reporting You need to report new hires through the New Jersey Child Support Employer Services Portal. Alternatively, you can download the PDF form and mail it to the agency at the address on the form. This must be done within 20 days of hire or rehire, per federal law. Paid Sick Leave New Jersey requires all employers to provide all employees with 40 hours of paid sick leave per year. You must maintain a 12-month benefit year that is not dependent on the employee’s anniversary date. Unused days must be carried over or paid out at the end of the benefit year. New Jersey Family Leave Act The New Jersey Family Leave Act allows up to 12 weeks’ family leave in a 24-month period without the threat of job loss. This act does not apply to the employee’s health, but rather to the care of family members. This can include: A leave of absence within a year of a child’s birth, adoption, or foster care to bond with the child Caring for a sick family member with a serious health condition This rule applies to employers with at least 30 employees, and to employees who have worked for the employer for at least a year and at least 1,000 hours in the past 12 months. Employees need to give at least 15 days’ notice for intermittent leave, 30 days’ notice for consecutive leave for a child, “reasonable notice” for an ill family member, and as much notice as possible for emergencies. You may also have to provide additional unpaid sick leave in accordance with the federal Family and Medical Leave Act. Lunch & Other Break Time Requirements New Jersey does not have any state-specific laws regarding meals or other breaks. You should default to federal law, which essentially says you need to pay for short breaks, but not bona fide meal breaks where the employee is not doing any work. Meal breaks are usually 30 minutes or longer, though they can be shorter depending on circumstances. Minors under 18 get a mandatory 30-minute lunch break if they’ve worked more than five hours continuously. Hiring Minors New Jersey law concerning hiring minors is complex, with different work hours, requirements, and prohibitions depending on the age and type of work. It has separate rules for children in theatrical occupations, newspaper carriers, and street trades. There are also different rules for restaurants and bowling alleys during summer or school vacation, such as different hour restrictions. You can find the complete law on the New Jersey Department of Labor website, or check out the PDF summary. In general, minors under 18 must have an employment certificate, and employers must keep a record of this. The chart below gives only the most general prohibitions. There are different rules for workers in factories, theater, or newspaper carriers. Refer to the PDF for details. Minors under 16 are prohibited from working in or around power-driven machinery, which includes power lawn motors but does not include the cash machine conveyor belt found in stores. Minors cannot work certain chemical-type jobs such as mixing paint, handling acids or dyes, or work involving benzene exposure. Payroll Forms Most of New Jersey’s payroll tax forms need to be filed online, although it still offers other filing methods and you can find the forms in fillable PDFs online. New Jersey State W4 Form New Jersey’s withholding exemption form is the NJ W-4. Employees should fill this out when they first take on a job and whenever they have a change in their exemptions. Other New Jersey State Payroll and Tax Forms MW400, Employer Obligation to Maintain and Report Records: You must give this to all employees upon hiring. This form describes your obligation as an employer to maintain and report records regarding wages, benefits, taxes, and other contributions. NJ-W-3M: These are income tax reconciliation forms, best submitted electronically. NJ-927 and WR-30: Used to report unemployment insurance withholdings, these are filed electronically. There are alternate instructions on the state website. Find other payroll forms on the state website. Federal Payroll Forms W-4 Form: To help employers calculate taxes to withhold from employee paychecks W-2 Form: Reporting total annual wages earned (one per employee) W-3 Form: Reports total wages and taxes for all employees Form 940: Reports and calculate unemployment taxes due to the IRS Form 941: Filing quarterly income and FICA taxes withheld from paychecks Form 944: Reporting annual income and FICA taxes withheld from paychecks 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work New Jersey Payroll Tax Resources/Sources New Jersey Income Tax Withholding Instructions: Explains how to calculate and file taxes, executions, and special rules New Jersey Division of Taxation: Holds information on all types of taxes, including corporate taxes, and has the link for filing New Jersey Wage and Hour Compliance: Contains information and flyers about wage and hour rules New Jersey Family Leave Act Information Sheet: Provides rundown on NJFLA for employers or employees New Jersey Child Labor Form: Includes basic regulations by occupation and age, broken down for employers or employees. New Jersey Employer’s Handbook: Everything you need to know about unemployment, disability, and workforce development programs Bottom Line New Jersey charges state income taxes on all wages, from $1 to millions. It also requires state unemployment and workers’ compensation insurance if you have even one employee. The HR and payroll rules are straightforward, however, with no break or PTO regulations, but there is required sick pay. The rules for minors are more varied than those of other states. It pays to make sure you are following the rules correctly to ensure payroll compliance.

Paying employees in Texas is a much easier process than you’ll find in other states. There’s no income tax, businesses aren’t required to purchase workers’ comp insurance, and employers only pay state unemployment taxes (SUTA). There are some special laws concerning overtime and minimum pay frequency, but overall, Texas follows the federal regulations concerning business taxes. If you’re learning how to do payroll in Texas on your own and want to avoid being penalized for making mistakes, consider using . QuickBooks Payroll is an all-in-one payroll service that helps you onboard new employees, pay with direct deposits at no additional costs, and file payroll taxes. It even guarantees you won’t face any IRS penalties or late fees if a QuickBooks Payroll rep makes a mistake. Sign up today and get 50% off for 3 months. Running Payroll in Texas—Step by Step Instructions Running payroll in Texas is a little different from running payroll in other states, but it’s not typically extra work. Step 1: Set up your business as an employer. Get your company’s Federal Employer Identification Number (FEIN). If your company is brand-new, you may need to apply for a FEIN. This is a simple process that can be completed online via the Electronic Federal Tax Payment System (EFTPS). If you work for a company that already has one, keep the FEIN handy. The FEIN is required to pay federal taxes. Step 2: Register with the Texas Workforce Commission (TWC). You need to register online within 10 days of the first check date to get your TWC Account Number. If you use a third-party payroll administrator, then you need to register them as your payroll administrator. Go to the TWC Unemployment Tax Services site and click on Sign up for User ID or log on. Once you are in, grant permissions to your payroll provider, being sure to assign Manage Wage Report permissions. Step 3: Create your payroll process. If you work for an established business, you may have inherited a payroll process. But if your company is brand-new, you may need to start your payroll process, which means deciding how often you’ll be paying employees, when you’ll pay them, how you’ll track and calculate hourly employees’ work time, etc. Overall, you can opt to do payroll yourself by hand, set up an Excel payroll template, or sign up for a payroll service to help you handle your Texas payroll. Step 4: Collect employee payroll forms. This is easiest to do during onboarding. The forms to collect include the W-4, I-9, and direct deposit information. Texas does not have any additional forms. Step 5: Review time sheets. This step is one you’ll repeat as you do payroll each period. Keeping track of employees’ hours is essential for ensuring accurate payroll. Whether you use paper time sheets or time and attendance software, always review time sheets for accuracy and discuss any errors or issues with employees right away. Having employees sign off on their time sheets is a good idea, whether they do so electronically or by pen on paper. Be sure to do this a couple of days before payday, as Texas Payday Law states that employees must receive their wages no later than the specified payday. Step 6: Calculate payroll and pay employees. You can use software, a calculator, or even Excel to calculate payroll. Step 7: File payroll taxes with the federal and Texas state government. Follow the IRS instructions for federal taxes, including unemployment. In Texas, there is no income tax, but you do need to file State Unemployment Insurance taxes each quarter. Businesses with fewer than 1,000 employees can file online with an Excel or CSV report, manual entry, entry based on the last report you filed, or a No Wages report if you did not pay wages that quarter. Log on to Unemployment Tax Services site and follow the directions. State UI tax reports are due by the following dates: If the due date for a report or tax payment falls on a Saturday, Sunday, or legal holiday on which TWC offices are closed, reports and payments are considered on-time if they are received on or before the following business day. Step 8. Document and store your payroll records. It’s important to keep records for all of your employees, even those terminated, for at least three to four years. Learn more in our article on retaining payroll records. Step 9. Do year-end payroll tax reports. These are the federal Forms W-2 (for employees) and 1099 (for contractors). Employees and contractors must have these by Jan. 31 of the following year. There are no special forms for Texas; federal forms will suffice. Texas Payroll Laws, Taxes & Regulations For the most part, Texas payroll laws follow federal regulations. Compared to doing payroll in states like California, it has far fewer regulations than most states when it comes to doing payroll. In addition, some of Texas’ payroll regulations that differ from federal law are even less strict—usually, when states set payroll regulations that contrast with federal law, they’re more restrictive. Texas Taxes The only Texas payroll tax that employers are responsible for paying is for state unemployment insurance. Keep in mind, however, that you will still need to pay federal Social Security and Medicare taxes (FICA) and withhold a matching amount from your employees’ paychecks. Specifically, both you and your employees will each pay 6.2% of their paycheck for Social Security contributions and 1.45% for Medicare. Unemployment Insurance Tax Texas charges unemployment insurance (UI) taxes on the first $9,000 that each employee earns in a calendar year. You must pay unemployment insurance taxes if you are liable under the Federal Unemployment Tax Act, pay $1,500 or more in total gross wages in a calendar quarter, or have at least one employee during 20 weeks in a calendar year. There are other liability rules; find them on the TWC website. New employers use the average rate for employers in their North American Industry Classification System (NAICS) code or 2.7%, whichever is higher. After paying for four quarters, the state will give you a new UI tax assessment. In 2022, the tax rate ranges from 0.31% to 6.31%. Please note: You must pay SUTA out of your business funds; the cost shouldn’t be passed to the employees. Unemployment insurance taxes vary year by year and are comprised of five parts: General Tax Rate (GTR): Also known as the experience-rate, it’s based on the benefits that were paid to your former employees and charged to your account. It considers three years’ benefits in its calculations. Replenishment Tax Rate (RTR): This is a flat tax paid by all employers to replenish the Unemployment Compensation Trust Fund for the other half of the benefits paid to eligible workers that were not charged to any specific employer. The state sets the RTR for everyone. Obligation Assessment Rate (OAR): This collects money to pay bond obligations. However, the current rate is 0.0%. Deficit Tax Rate (DTR): If the amount of money in the Unemployment Compensation Trust Fund is less than the established minimum, the DTR is added for the next calendar year for each experience-rated (i.e., not new) employer. The DTR is $0 for 2022. Employment and Training Investment Assessment (ETIA): This money is deposited to an employment and training investment holding fund, and is 0.1% of wages paid by an employer. However, your replenishment tax rate is reduced by the same amount, so your unemployment taxes do not increase. You’re also responsible for federal unemployment taxes (FUTA). The standard rate is 6% on the first $7,000 of each employee’s taxable wages. The maximum tax you’ll pay per employee is $420 ($7,000 x 6%). State and Local Income Taxes Texas does not have state or local income taxes, saving you money that you can invest into your business—or your employees. Minimum Wage Rules in Texas The minimum wage in Texas is $7.25 an hour, which aligns with the federal minimum wage amount. Exemptions include those covered under the federal Fair Labor Standards Act (FLSA) and the following: Individuals employed by religious, educational, charitable, or nonprofit organizations Professionals or salespersons Domestic workers Certain youths and students Inmates Family members Employees working in amusement and recreational establishments Employees working for non-agricultural employers not liable for state unemployment contributions Employees employed in dairying and the production of livestock Employees in sheltered workshops Commission & Bonus Amounts If you pay an employee commission or a bonus, you are required to set up a clear written agreement laying out the details of the payment arrangement. This doesn’t mean the amounts have to be set in stone, and there’s no minimum amount. However, you are not allowed to make any changes retroactively—only for future payments. Approved Deductions That May Drop an Employee’s Pay Below Minimum Wage Texas, as do all states, enforces its minimum wage laws. And at times, payroll deductions can cause an employee’s pay to fall below that amount. In these cases, there are specific scenarios that the TWC will allow the deduction without penalizing the employer, but there are others that are illegal. Payroll deductions that you can enforce, even if they drop an employee’s pay below Texas’ minimum wage are: Costs for meals, lodging, and other facilities: The amounts must be “reasonable,” and the employee must authorize you to withhold the money in writing. Tip credits: You can deduct a maximum of a $5.12 tip credit per hour from a tipped employee’s hourly pay rate; if they’re paid $7.25 per hour, their tipped minimum wage would be $2.13 per hour. This is actually federal law, but an important one to keep in mind. You are legally allowed to take the tip credit without an employee’s authorization. Voluntary deductions: If any employee authorizes you to deduct money from their paycheck, i.e., for a holiday savings fund or to repay a payday loan, you will be in the clear should their paycheck fall below minimum wage. However, if you initiate the deduction without their consent, you can be held liable for an FLSA violation. Repayment of loans and advances: You can deduct money to repay a loan or advance you issued to the employee; however, it can only cover the principal—no interest or administrative costs if it will bring their paycheck below the minimum wage. This also includes vacation pay advances. Uniforms and cleaning costs: If you, the law, or the type of work the employee is performing requires them to purchase a uniform, you cannot deduct money for it from their paychecks if it will cause the amount to fall below minimum wage. Of course, if it doesn’t, and the amount is reasonable, uniform and cleaning costs can be withheld. If the employee authorizes you to deduct money for such costs even though their paychecks will fall below minimum wage, you can do so without being held liable. Union dues: You can deduct union dues from an employee’s paycheck even if it causes their earnings to fall below minimum wage; the key is to get their authorization in writing first. Garnishments: Any court-ordered payments you’re legally obligated to deduct from an employee’s pay can lower their pay below minimum wage. This includes bankruptcy garnishments, child and spousal support, etc. Unlike how loans and advances are handled, you are allowed to deduct a $10 administrative fee for processing child support payments, IRS tax levies, and student loan wage withholdings. Cash shortages: If you employ cashiers or anyone who handles cash, it is likely that they may one day come up short at the end of their shift. By law, you are allowed to recapture the amount you lost via payroll deduction, but only if you can prove that the employee was personally and directly responsible for misappropriating the funds. You can’t recoup funds that are lost due to typical negligence or an issue with the equipment. Texas Overtime Regulations Texas follows the federal FLSA to determine who is entitled to overtime. Texas overtime law states that employees are entitled to overtime if they work over 40 hours in a workweek. They can be reimbursed either with overtime pay at 1.5 times their regular rate or compensatory time off at 1.5 hours for each hour of overtime. Employees choosing the time-off option cannot accumulate more than 240 hours (or for public safety, emergency response, or seasonal employees, 480 hours). If you need help calculating overtime for your employees, use our free calculator below: Different Ways To Pay Employees in Texas Texas doesn’t have any special rules restricting the methods you use to pay employees. That means you can pay employees with cash, check, direct deposit, or even payroll card. If you’re paying the employee their wages in a form other than one of the types previously listed—for instance, in goods—you’ll need to prepare a written agreement for both you and the employee to sign with the details of the payment arrangement before distributing. Pay Stub Laws You don’t have to provide a pay stub for employees covered by the FLSA, but it is a good practice. If you pay an employee in cash, you should have them sign a receipt to verify they received it, the date, and the amount of the check. This will protect you in the event that the employee claims they never received the money. Texas Minimum Pay Frequency for Employers Employees have the right to be paid their wages on time. All exempt employees must be paid at least once a month; nonexempt employees (usually hourly workers) must be paid at least twice a month. If you’re paying semimonthly (twice a month), you must select the pay dates in a way that each included period will have, as closely as possible, an equal number of days between them (for example, the 15th and the 30th). For more guidance on when to pay employees in Texas, read a breakdown of the Texas Payday Law; it outlines employer responsibilities and defines how employees can make claims for the compensation they did not receive. Final Paycheck Laws in Texas When an employee quits or is terminated, it’s important to distribute their final paycheck in a timely manner. Legally, you have six days to process it if you terminate their employment. If the employee quits on their own, the deadline is the next regularly scheduled pay date. So whether that’s in two days or two weeks, you’ll need to have a paycheck ready with all of the money you owe them. Please note that even if any employee owes you money for a uniform they should have paid for or has a laptop they didn’t return, you are not legally allowed to delay their final paycheck in retaliation. If the employee who is leaving is a commissioned employee or believes they’re due a bonus, you must follow the written agreement. If it states you will be paying a bonus for work done in the first quarter, and they’re leaving in the second quarter, you are obligated to pay. Severance Pay in Texas Texas law will only enforce you to pay a severance if you signed a written agreement stating you would under certain conditions that have come to pass (i.e., a massive layoff). As for deductions, you’re required to withhold money for taxes, but in addition to that, child support. If you’ve received an earnings withholdings order for someone you will be paying severance, it’s important to compute how much you’ll need to withhold and payout (use the period of time that the garnishment covers to compute how much the employee is responsible for). Accrued PTO Payout You don’t have to pay out unused paid time off (PTO) if you don’t want to. Both Texas and federal law leave it up to employers. The caveat to this is that if you included any statements about paying accrued PTO when an employee is leaving the company, then you must follow through. The law simply requires employers to abide by the policies and agreements they set at the beginning of the employment relationship. Texas HR Laws That Affect Payroll Texas has numerous HR laws, but many align with federal HR laws. You’ll need to pay close attention to how often you can pay employees (it varies for different types) and the specifics around hiring minors. Texas New Hire Reporting You must report new hires and rehired employees within 20 calendar days of the hire, or if you report electronically, at least twice a month, with reports 12 to 16 calendar days apart (strive to have it done before their second paycheck). Failure to report a new hire incurs a fine of $525 per unreported employee. You can report new workers to the Texas Employer New Hire Reporting Operations Center. (Don’t panic when the link takes you to the Child Support Division of the Office of the Attorney General; it is responsible for new hire reporting.) Breaks, Meals & Paid Leave Texas does not have laws concerning breaks or leave. However, businesses must provide up to 12 weeks of unpaid job-protected leave under the federal Family and Medical Leave Act (FMLA) if they have 50 or more employees stationed within 75 miles of the employee taking that kind of leave. The employee must also meet the various eligibility conditions to be entitled to the leave. You can get more information on FMLA Leave from Texas.gov’s website. Naturally, providing paid time off makes you more desirable to candidates. Any PTO or breaks promised in a written policy or employment agreement are enforced under the Texas Payday Law. To protect yourself from liability and ensure your employees are properly compensated, you’ll need to set up a system to properly document their work hours using a time sheet or time clock. Child Labor Laws If you’re hiring any employees under the age of 18, you’ll need to comply with Texas’ Child Labor Laws, which differ slightly from federal law. For example, federal law states that children cannot work more than 18 hours a week when school is in session, while Texas law allows up to 48 hours a week at any time. It also allows hardship exemptions when the child is supporting their family. You’ll need to take this into consideration when you schedule and pay employees. If you’re ever audited, you will be required to hand over payroll reports, which will show the number of hours they worked and when. Payroll Forms The only state-specific payroll form you’ll need to be an employer in the state of Texas is the Texas Unemployment Tax Report. Otherwise, you’ll just use federal payroll forms. Texas W-4 Form Since Texas does not have state income taxes, there is no state W-4 form. You’ll simply use the federal form that we linked in the federal payroll forms section below. Texas Unemployment Tax Report You will need to file a quarterly wage report and pay unemployment taxes. You can do this by uploading a spreadsheet or manually typing it into the TWC system. Per the TWC website, you need: The number of employees, both full time and part time, employed in the months covered by the wage report The Texas county where the greatest number of your employees worked The number of employees who worked outside the county you reported above A Social Security Number for each employee unique to that quarterly wage report Each employee's last name and first initial (the middle initial is optional) The Texas wages paid to each employee for the quarter The wages paid to each employee and reported to a state other than Texas, if applicable Federal Payroll Forms W-4 Form: To help employers calculate taxes to withhold from employee paychecks W-2 Form: To report total annual wages earned (one per employee) W-3 Form: To report total wages and taxes for all employees to the IRS (summary of information on all employee W2 forms) Form 940: To report and calculate unemployment taxes due to the IRS Form 941: To file quarterly income and FICA taxes withheld from paychecks Form 944: To report annual income and FICA taxes withheld from paychecks 1099 Forms: To provide non-employee pay information that helps the IRS collect taxes on contract work Resources/Sources Texas Workforce Commission Businesses & Employers Site: Part of the larger TWC website, this is where you go to file unemployment taxes, learn about the latest changes to employment laws, and get resources for help in recruiting and managing employees and growing your business. It offers an automated chat to help you get answers to specific questions. Office of the Commissioner Page: Find links to COVID-19 resources, employer information and resources, and registration for Lunchtime Live 90-minute video sessions on employment law. Nolo.com’s Employer’s Guide for Paying Business Taxes: Learn about state rules for income and unemployment taxes, tax laws, and more. Also, check with your payroll software for resources and state-specific features. Bottom Line Texas is one of the easiest states for payroll processing and payroll taxes. Its minimal laws and excellent website make it easy to get answers. You’ll still need to follow deadlines for reporting new hires, filing tax paperwork, and paying your employees on time.

Payroll in North Carolina is pretty straightforward and follows general federal guidelines, requiring you to secure a Federal Employee Identification Number, NC Withholding Identification Number, and register for unemployment tax. However, there are still several labor law regulations that must be considered for state payroll compliance. Use our guide below to ensure you take the proper steps to correctly do payroll in North Carolina. If you want to avoid making mistakes and being charged penalties, consider using a payroll software like . It calculates, files, and pays your payroll taxes, and if you incur an error due to a mistake QuickBooks Payroll makes, it’ll cover your fees. You can also use the software to pay your employees via direct deposit and offer benefits. Get 50% off Payroll Software for 3 months. Running Payroll in North Carolina: Step-by-Step Instructions Step 1: Register your business on the federal level. To register your business for withholding and unemployment taxes in North Carolina, you must have a Federal Employee Identification Number (EIN). Although it’s not required, we also encourage you to enroll in the Electronic Federal Tax Payment System (EFTPS), making it easy to pay your federal taxes online or over the phone. Step 2: Obtain a Withholding Identification Number from the North Carolina Department of Revenue. Each new employer paying wages in North Carolina must register for a Withholding Identification Number by filling out a Form NC-BR and submitting it to the North Carolina Department of Revenue. Step 3: Register for Unemployment Tax with the North Carolina Division of Employment Security (DES). Your small business must register with the NC DES. Once registered, you'll be issued a North Carolina unemployment insurance number (Employer Tax Account Number) automatically. Step 4: Set up your payroll process. Established businesses may already have a payroll process in place, but a new company will need to begin with considerations such as how often employees will be paid, when they will be paid, and how hourly employees’ work time will be calculated. You can elect to do payroll yourself, set up an Excel payroll template, or use a payroll service. Step 5: Collect employee paperwork. To run payroll you will need to collect specific information from each employee: W-4 tax form NC-4 tax form I-9 paperwork Direct deposit bank information Step 6: Collect, review, and approve employee time sheets. You must collect and approve time sheets before submitting payroll. You can use paper time sheets, but we recommend time tracking software that can save you time and ensure the accuracy of reported hours. Step 7: Process payroll and remit payment to your employees. You also can use a payroll software system or just calculate payroll on your own. You must pay your employees on a regular schedule (daily, weekly, biweekly, semimonthly, or monthly). Be sure to also comply with minimum wage requirements. Step 8: File payroll taxes with federal and North Carolina state governments. Based on your withholding frequency, you must file Form NC-5 (monthly and quarterly withholding filers) or Form NC-5Q (semiweekly withholding filers). You can file your taxes online with the North Carolina Department of Revenue. The form you’ll use for federal tax filing depends on if your business is a sole proprietorship or LLC (Schedule C) or corporation (Form 1120 or 1120-S). Step 9: Process annual payroll reports: Every employer, regardless of which state your business is in, will need to complete W-2s for all employees and 1099s for independent contractors. By law, you must provide all employees and contractors with their annual tax form no later than Jan. 31 of the following year. Download our free checklist to help you stay on track while you’re working through these steps: North Carolina Payroll Laws, Taxes & Regulations North Carolina follows the general federal payroll laws currently in place, making it a simple state for payroll taxes and regulations. There are a few regulations, however, to consider: Employers are required to notify new hires orally or in writing about their wages and regular pay schedule. Employers are required by law to provide written notice at least 24 hours before any reduction in wages. Employers must abide by the minimum wage law and pay time and a half to nonexempt employees who work over 40 hours in a workweek. North Carolina Payroll Taxes Every North Carolina employer is responsible for paying payroll taxes, as well as Social Security, Medicare, and unemployment taxes for every employee. Social Security and Medicare taxes are paid under the Federal Insurance Contributions Act (FICA). The employer pays half of FICA, and the other half is paid from the employee’s wages, resulting in each party paying 6.2% for Social Security and 1.45% for Medicare. Employers must also pay State Unemployment Taxes (SUTA) and Federal Unemployment Taxes (FUTA) based on a percentage of each employee’s salary. The North Carolina new employer SUTA rate is 1%. After 12 months of paying into the system, you will receive a new SUTA rate each year. FUTA is taxed at 6% on the first $7,000 earned. Keep in mind that the following services are exempt from withholding laws: Agricultural labor, except where subject to federal withholding Domestic service in a private home Services performed by military spouses that are federally exempt, under the Veteran’s Benefits and Transition Act of 2018 State Income Taxes North Carolina has a flat income tax rate of 5.25%. This means that regardless of an employee's taxable income or filing status, the rate is the same for all. North Carolina requires employers to withhold state income tax from employees' wages and remit the amounts withheld to the Department of Revenue. Any employer that does business or has an employee in North Carolina, whether the employer is a state resident or not, must withhold state tax. Local Taxes There are no local or city taxes in North Carolina, making it one of the easier states in which to file payroll taxes. Unemployment Insurance Taxes If your small business has employees working in North Carolina, you'll need to pay North Carolina unemployment insurance (UI) tax. The UI tax funds unemployment compensation programs for eligible employees. Employers must file a Quarterly Tax and Wage Report (Form NCUI 101). Both tax and reported wages are due by the last day of the month following the end of each quarter. Workers’ Compensation Insurance All businesses with three or more employees in North Carolina are required to carry workers’ compensation insurance coverage to assist with medical costs in case employees are injured on the job. Workers’ Compensation Insurance is administered through the North Carolina Industrial Commission. Exceptions to the three-employee rule: Businesses whose work involves the use or presence of radiation must carry workers’ compensation on as little as only one employee. Agricultural employees are not required to carry workers’ compensation unless they employ 10 or more full-time, non-seasonal workers. Federal workers’ compensation is covered under the U.S. Department of Labor. Be sure to follow all guidelines for workers’ compensation insurance. Failure to provide it could result in penalties, a misdemeanor or felony charge, and even imprisonment. Minimum Wage Laws in North Carolina Employers must pay all nonexempt hourly employees a minimum wage of $7.25 (the current rate under both state and federal labor laws). For salaried exempt employees, employers must pay a guaranteed salary of $684 per workweek ($35,568 per year). However, for employers that have tipped hourly employees, such as restaurants, the minimum wage is set at $2.13 so long as the tips the employee receives bring their hourly wage up to the minimum of $7.25. This is known as a “tip credit.” However, if the worker’s tips do not bring their hourly rate up to minimum wage, the business must offset the cost so that the employee is making at least $7.25 per hour. North Carolina Law also allows tip pooling — the combining of all tips received and then the distribution of the collected monies equally between employees. North Carolina Overtime Regulations There are no labor laws in North Carolina that limit the number of hours an employee 18 years or older can work. However, nonexempt employees are required to receive time and a half overtime pay if their working hours reach beyond 40 hours per workweek. Exempt employees are not subject to overtime pay. Private employers are not permitted to give comp time to nonexempt salaried employees in place of time and half. Simply being paid a salary does not exempt an employee from receiving overtime pay. Different Ways to Pay Employees in North Carolina There are currently no laws in North Carolina that designate a specific form of payroll payment. Therefore, employers may pay their employees using any legal method they choose, as long as payment is made in full on the designated payday. Acceptable forms of payment include: Cash Check Money Order Direct Deposit Debit-Payroll Card If an employer chooses to pay with a debit-payroll card, to be compliant, the employee must be able to withdraw all funds on payday; also, there should be no cost to the employee for use of the card. North Carolina Pay Stub Laws North Carolina requires employers to provide written or printed pay stubs. This also includes electronic pay stubs that can be printed by the employee. Minimum Pay Frequency North Carolina does not have a mandatory pay frequency law; therefore, employers have a few options when it comes to how often they are required to pay their employees: Monthly Semimonthly Biweekly Weekly Daily Paycheck Deduction Rules Some deductions from paychecks are required by law, including state and federal income taxes and FICA. Court-ordered garnishments, such as child support or debt, can also be automatically deducted from an employee’s paycheck based on the ordered amounts and frequency. Additionally, North Carolina employers can deduct the following from employee paychecks with prior written consent: Health insurance premiums (medical, dental, vision, FSA, HSA) Retirement plan contributions Life and disability insurance premiums Job-related expenses, such as uniforms Tuition costs Donations for charity Purchases that require reimbursement by the employee Final Paycheck Laws in North Carolina North Carolina law states that an employee must receive their final paycheck on or before the next available payday following their termination, whether they quit or were terminated by the company. The final paycheck must include payment for all hours worked, commissions due, and any accrued but unused paid time off. Additionally, final paychecks can’t be held until the return of company equipment. North Carolina Severance Pay Laws North Carolina labor laws do not require employers to pay a severance upon employee termination. Should an employer choose to provide severance benefits, they must comply with any terms or conditions established by a severance policy or employment contract. Accrued Paid Time Off If there are no company policies in place, the employer is required to pay employees for accrued time off upon termination of employment (voluntary or involuntary). Earned time off cannot be forfeited unless the employer has a written forfeiture clause in its company policies under N.C.G.S. 95-25.13(2). This means that if your company handbook or policies manual does not specifically state what happens with accrued paid time off, you are liable to pay it upon termination. North Carolina HR Laws That Affect Payroll Human resources laws in North Carolina align with federal guidelines. While there are no special requirements, you should be aware of federal rules. North Carolina New Hire Reporting Federal law requires employers to report all new hires and rehired employees in the state of North Carolina within 20 days of hire to the Division of Social Services (DSS) State Directory of New Hires. Employers must first register with the DSS and then log in to report any new hires. Lunch & Other Break Time Requirements State law only regulates rest breaks or meal breaks for youths under 16 years of age, as required by the Wage and Hour Act. Youths under 16 must be given a minimum 30-minute break after five consecutive hours of work. Lunch or break time is not required for any employee age 17 or older, regardless of the number of consecutive hours they work. Child Labor Laws The Wage and Hour Act protects minors by restricting the types of jobs and the number of hours they are allowed to work. North Carolina law follows the federal employment guidelines for youths under the age of 18 employed in non-farm jobs. Employment in certain occupations, such as hazardous or detrimental occupations, is not allowed for those under the age of 18. Additionally, federal law prohibits you from scheduling minors to work during school hours on school days. Work Permit for Minors Employees between the ages of 14 to 17 who work in North Carolina must obtain a Youth Employment Certificate. Once the minor has registered, they will receive a Youth Employment Identification (YEID) number. To obtain the certificate, they must provide their YEID number to their employer. The employer can then begin the process: You must verify the youth's age, proposed job duties, and any restrictions. You then enter the appropriate business and employer information with the North Carolina Department of Labor. The YEID number must be entered during this process. Once submitted, an email will be sent to the youth for the next step in the process. After the youth and the parent/guardian sign the certificate, you will receive an email with the completed youth employment certificate attached. As a best practice, you should retain a copy of the certificate for three years after the youth turns 18 or separates from employment. Payroll Forms Payroll forms, beyond federally required forms, that must be submitted in the state of North Carolina are limited to those of unemployment tax. You will be required to file a quarterly wage report to the Division of Employment Security. North Carolina State W-4 Form North Carolina requires employers to obtain a federal W-4 form from all employees to determine the number of withholdings from their paychecks. Additionally, you should collect an NC-4 form from employees. The NC-4 makes sure you are withholding the correct amount of state income tax. Should an employee not provide you with an NC-4 form, you are required to set their withholding to “single,” zero exemptions. Unemployment Tax Forms North Carolina employers, doing business as a sole proprietorship, partnership, or corporation, must file a quarterly Unemployment Insurance Tax Payment, as well as the Employer’s Quarterly Tax and Wage Report (NCUI 101). You may also be required to pay unemployment insurance tax on any North Carolina business you acquire that is already subject to the tax. Both taxes and reported wages are due by the last day of the month following the quarter and must be submitted even if the employer has no employees in that quarter. Federal Payroll Forms W-4 Form: To help employers calculate taxes to withhold from employee paychecks W-2 Form: Reporting total annual wages earned (one per employee) W-3 Form: Reports total wages and taxes for all employees Form 940: Reports and calculate unemployment taxes due to the IRS Form 941: Filing quarterly income and FICA taxes withheld from paychecks Form 944: Reporting annual income and FICA taxes withheld from paychecks 1099 Forms: Providing non-employee pay information that helps the IRS collect taxes on contract work North Carolina Payroll Tax Resources/Sources Department of Revenue (NCDOR): Monthly: Withholding Payment Voucher (NC-5P) Quarterly: Withholding Return (NC-5) Quarterly Income Tax Withholding Return (NC-5Q) Annually: Annual Withholding Reconciliation (NC-3) Wage and Tax Statement (NC-W2) Division of Employment Security (NCDES): Quarterly: Unemployment Insurance Tax Payment Employer's Quarterly Tax and Wage Report (NCUI 101) Department of Health and Human Services Applicable for all New Employees: New Hire Report Bottom Line When it comes to setting up payroll for your employees, you’ll be responsible for more than just providing a paycheck. Every employer must withhold and remit payment for all payroll taxes to both the Department of Revenue and the state of North Carolina. Additionally, you must pay unemployment insurance taxes. While the process can be simple, specific labor laws can be tricky so be sure to follow all requirements listed in this article to properly set up and submit your payroll.