Human Resources

HomeWork Solutions (HWS) offers household payroll and nanny tax compliance services. It handles tax calculations, including tax payments and filings in all 50 states and across all levels (federal, state, and local). It also manages new hire reporting and helps new household employers set up their tax accounts with the IRS. For its full-service nanny payroll package, pricing starts at $220 per quarter for biweekly pay runs. What We Recommend HomeWork Solutions For HomeWork Solutions is good for households that employ nannies, housekeepers, and senior home caregivers. It’s among our leading nanny payroll services because it provides options that allow household employers to outsource either the entire payroll process or just nanny tax filings—although you have to pay extra for year-end tax report prep for both plans. It is excellent for employers not wanting to commit the time, energy, and expertise needed to meet nanny payments and tax requirements, and also for those that need consulting on labor law compliance. Overall, HomeWork Solutions is best for: Employers wanting help meeting nanny tax requirements: HWS handles quarterly and annual tax requirements, so you don’t have to worry about complying with state and federal law. Employers who prefer not to make direct payments to household employees: If you’re tired of writing checks every week, choose HWS’s Complete Payroll plan, which eliminates your need to process employee payments. Domestic employers needing HR support: HomeWork Solutions provides free HR consultations, so you can better understand your obligations as a household employer. You can also take advantage of its partnership with various third-party providers for insurance services and background checks. When HomeWork Solutions Would Not Be a Good Fit Families with multiple household employees: HomeWork Solutions’ base pricing plan only includes services for one employee. Additional employees cost $60 per worker, per quarter. For that reason, households with multiple employees may find the service more costly than similar providers. For a more reasonably priced option, consider SurePayroll as it charges only $49.99 monthly and $10 per additional employee—plus, you can run unlimited payroll and don’t have to pay extra for annual tax reports. Employers looking to offer benefits to household staff: While HomeWork Solutions has an insurance partner that can help you get workers’ compensation plans for your household employees, it doesn’t offer benefits plans. If you want to provide health insurance and other benefits, we recommend either SurePayroll or Paychex, although you have to pay extra for it. Top HomeWork Solutions Alternatives If you’ve narrowed your list down to a few providers but still need help deciding which the best payroll software for you is, follow our step-by-step guide on choosing the right payroll solution. HomeWork Solutions Pricing HomeWork Solutions offers two plans: Complete Payroll and Essential Payroll. With Complete Payroll, you can choose to run payroll weekly or biweekly, and HWS will handle the entire process—from calculating earnings/deductions to filing tax forms and paying your employees. On the other hand, Essential Payroll includes only nanny payroll tax payment and filing services, and you have to issue employee payments yourself. Both plans require you to pay a $110 one-time setup fee and a $110 year-end tax report fee per employee. Note that HomeWork Solutions’ pricing for its Complete Payroll plan is based on a single-employee household. You have to pay an extra $60 per additional employee for every quarter. For example, if you have four employees, you will pay an additional $180 per quarter. Apart from nanny payroll, the provider offers small business payroll and tax services through its HomeWork Payroll solution. Weekly payroll costs $23 per pay run plus $2 per employee, while biweekly payroll costs $41 per pay run plus $2 per employee. Not sure which HomeWork Solutions plan will fit your budget? Use our online calculator to compute the estimated quarterly and annual fees. HomeWork Solutions Features HomeWork Solutions Ease of Use New household employer tax account set up Free HR consultations Employer and employee online portal Dedicated payroll representative Online blog and other resources that tackle common household employment issues Customer support via phone, email, and online form Enrolling for a HomeWork Solutions account is easy. Simply choose a plan from the HomeWork Solutions website to start the process. It has an online wizard to guide new clients through registration—although there’s also an option for downloading a paper registration form. Keep in mind, however, that account setup takes anywhere from five to seven days to complete from the time HomeWork Solutions receives all of the necessary employer information. You also get a dedicated payroll specialist if you subscribe to its Complete Payroll package. Even if you don’t, HomeWork Solutions offers free HR consultations if you have nanny payroll questions and queries about your household employer obligations. It even provides unlimited support, and you can contact customer service Mondays through Fridays, from 8:30 a.m. to 7 p.m. Eastern time. What Users Think About HomeWork Solutions There are very few up-to-date HomeWork Solutions reviews online as of this writing. Those who left feedback on third-party review sites said that its service simplifies the nanny payroll process, making it easy for them to meet state and federal tax requirements. Many commended its support team for excellent service, although some complained about having experienced occasional tax errors, especially when there are tax law updates. At the time of publication, HomeWork Solutions reviews earned the following scores on these popular user review sites: Trustpilot: 4.6 out of 5 stars based on 185+ reviews Better Business Bureau: 3 out of 5 stars based on two reviews Bottom Line Households with employees like nannies, housekeepers, and senior care providers are often faced with challenging and time-consuming tax and payroll requirements. HomeWork Solutions helps these employers by handling nanny payroll and taxes and keeping track of state and federal reporting and filing requirements. If you’re ready to get started, enroll online, or contact HomeWork Solutions for a one-on-one consultation. You May Also Like… What Is Nanny Tax? Best Payroll Services How to Hire a Nanny

The I-9 form is a Department of Homeland Security (DHS) document used to verify a person’s eligibility to work in the US. Workers provide identification such as a Social Security card and driver’s license or passport. The employer then physically verifies these documents to confirm the employee’s work eligibility. Both employer and employee complete and sign the form. Download I-9 Form Here How the I-9 Form Works The I-9 form supports a Homeland Security procedure that ensures US employers hire only those who have the proper work eligibility and identification documents. This is different from a W-4 form, which provides similar information for tax purposes. When employers are learning what an I-9 form is and how it works, it’s important to point out that they are responsible for getting it completed within three days of a new hire's start date. Here are the basic requirements to complete an I-9 form correctly: Request ID: New employees must provide ID to complete the I-9 form within three days of hire. Verify ID: You physically confirm the employee’s ID as proof of eligibility and document it on the form. File the I-9: You keep a copy of the completed and signed I-9 form in a secure folder. The signed I-9 form should be stored in the company’s business office in case your business is audited or a government agent from the Department of Labor (DOL), DHS, or immigration services requests to see a copy. It should not be kept in an employee’s personnel file due to the confidential information that’s on it. You do not need to send or mail it to any government agency. The US Citizenship and Immigration Services (USCIS) requires you to retain I-9 documents for one year. Some states may have longer payroll document retention requirements. It’s risky to keep the documents longer than they’re needed since I-9 forms contain confidential employee information. If that information is used inappropriately, your business may be held liable. Downloadable & Printable I-9 Forms The most updated I-9 form can be found on the DHS USCIS website. The I-9 form itself is three pages, and the instructions are an additional 15 pages. Both the form and the instructions are available in English and Spanish (however, only employees in Puerto Rico may complete the Spanish version of the form). Many payroll providers, like , provide the I-9 form in an electronic new hire packet that is emailed to the employee. Paper I-9 forms are another option and can be downloaded from USCIS and handed or mailed to the employee for completion. What an I-9 Form Verification Document Is To simplify I-9 verification, USCIS provides a list of acceptable verification documents directly on Page 3 of the I-9 form. Most new hires who are US citizens provide either a driver’s license and Social Security card or a US passport as their I-9 form verification document. A US passport acts as both identity verification and US workforce eligibility, so it serves both purposes in one document. When a new hire presents a valid (not expired) US passport as their I-9 documentation, that’s all you need. No other documentation is required. Employees who do not have a valid US passport must provide two forms of work authorization: one from the column on the left (below) and one from the column on the right. A driver’s license and Social Security card are the most common. Additionally, a government-issued document, school, military, or tribal ID will often suffice along with a birth certificate or Social Security card. Non-US citizens may need to provide an employment authorization or resident ID card as they are not likely to have a valid Social Security card or a US birth certificate. I-9 Form Legal Requirements US employers are required to have each new hire complete an I-9 form. The completed form, verified and signed, should be kept on file for up to three years for any employee currently employed and up to one year for terminated employees. You may need to show these documents to immigration officials or other government employees who may check to make sure your business is only hiring documented workers eligible to work in the US. There are four kinds of workers who may legally work in the US with proper I-9 documentation: US citizens: Including both native-born and naturalized citizens Lawful permanent residents: Immigrants who live in the US full time Individuals with work authorization: Foreign workers with work permits Non-citizen nationals: Individuals working in the US while remaining a citizen of another country Taking the time to learn what an I-9 form is and how to complete it correctly benefits your business in several ways, especially if you’re ever audited or raided by the Immigration and Naturalization Service (INS). However, not completing it correctly can wreak havoc on your business. I-9 violation penalties can cost nearly $5,000. This includes document mistakes, such as failing to complete an I-9 for a new hire, to willful mistakes, such as knowingly hiring illegal workers or falsifying records. Fines can be applied to each I-9 form, and they increase with each offense. For example, if the same mistake is made on 75 employee forms, the fines can add up. If you follow the USCIS instructions and complete I-9 forms for all new hires, you’re likely to be in good shape. However, there are common mistakes that anyone who processes I-9 forms should avoid: Allowing employees to provide you with a photocopy instead of an original document Not filling out the I-9 form completely— leaving blanks in required fields Missing the documentation deadline of filling out the I-9 form within three days of hire Failing to verify documentation yourself and just “taking an employee’s word for it” Failing to keep copies of the signed I-9 form in an on-site office location Failing to store the documents in a secure place to protect confidential employee data I-9 Eligibility Document Verification The employer is responsible for physically verifying the documents provided by employees. However, the government doesn’t require you to be a forensic expert. Instead, it expects you’ll use common sense and due diligence when you review documents. For example, if a document appears to be photocopied or modified, ask to see the original document instead. Employers can also use a government tool called E-Verify to verify work eligibility online and reduce their risk of hiring an ineligible worker. E-Verify is required in some states, as well as required for any business doing federal contract work. In some locations, the use of E-Verify may be a condition of obtaining a business license. If you want to prevent undocumented workers from applying for jobs in your business, consider using an E-Verify logo that alerts job seekers that you’re using the E-Verify system. How to Identify & Report Fraud in Documents Used for I-9 Verification You may come across falsified identification. The USCIS provides complete instructions on how to examine documents. If you feel that fraud or a scam is taking place regarding immigration documentation, you can report that on the USCIS website. However, immigrants have rights, and one of those rights is not to be discriminated against. If you’re concerned about discrimination, refer to the Justice Department’s webpage on immigrant and employee rights. Some examples of possible fraud: Employee presents a document that is not on the list of acceptable documents. Employee presents a document with a different name. Employee presents a document with different spelling in the name. Employee presents a document that appears to be tampered with. I-9 Requirements for Remote Workers When it comes to remote workers and completing the I-9 form, the employer or an authorized representative must physically examine, with the employee present, each document presented. This means that the employee must physically be in front of the person reviewing their documents–reviewing or examining documents via webcam is not permissible. If someone from your company is not able to physically review a remote employee’s documentation (e.g., if they are located in another state) an authorized representative must review the documents in person. An authorized representative can be anyone–friend, relative, etc–so long as they physically review the documents and sign the I-9 form. If a notary public is used, they act as the authorized representative and not a notary. Therefore, a notary seal on an I-9 will not be accepted. When I-9 Forms Are Not Needed While all statutory employees (employees whose names and information you send to the state as part of state new hire reporting) need to demonstrate workforce eligibility, you do not need to request or complete I-9 documents for contract workers, temporary staff hired through an agency, domestic workers who work intermittently, or remote employees—often outsourced through a virtual assistant company—who live and work outside the US. Contract Workers Freelance employees and contract workers are paid by project or assignment and don’t require that you complete an I-9 form. Instead, you gather data when they complete a W-9 tax withholding form. This option comes with big risks if you misclassify what should be considered an employee as a contract worker instead. For information, check out our piece on W2 vs 1099 workers. Temporary Staff Some employers build their business (at least in the beginning) with staff provided by a temp agency. Instead of paying a wage and salary, they instead lease workers from a staffing agency that hires and pays the worker. The staffing agency (not you) manages new hire paperwork and I-9 verification. You instead pay an invoice to the staffing firm—typically a markup of 25% or more. Intermittent Domestic Workers Domestic workers, such as house cleaners, childcare workers, or lawn maintenance workers, that work intermittently (not on a regular schedule) are not required to provide I-9 documentation. Additionally, if you employ domestic workers through an agency (i.e., maid service company), you do not need to complete and verify I-9 documentation. Remote Employees Outside the US Virtual assistant (VA) companies hire workers, often overseas, to provide task-based work. As the employer of record, the VA company manages all employee compliance. You simply sign up for the kind of work you need—from office administration to IT programming—and pay a fee based on hours, tasks, or a monthly package price. Bottom Line All businesses, small and large, are required to collect acceptable documentation and fill out I-9 paperwork. Once you learn the process, it should come as second nature to you with each new hire. The I-9 form, if completed correctly and within the required timeframe, can save you money by avoiding fines. Take the time to familiarize yourself with what the I-9 form is all about and the requirements before your next hire. Then, consider auditing your current I-9 files to ensure existing forms were done correctly.

MightyRecruiter, an end-to-end recruitment software, lets you post unlimited job ads to its network of job board sites for free. Aside from that and applicant tracking tools, its features include candidate ranking, referrals management, reporting and analytics, a searchable resume database, and a branded career website—all at no cost. What We Recommend MightyRecruiter For MightyRecruiter’s robust applicant tracking features earned it a spot in our guide on the best free applicant tracking systems (ATSs). Users find its platform intuitive and very easy to use, but it got low ratings in its reporting features since it’s not highly customizable. In short, we recommend MightyRecruiter for: Staffing agencies hiring for multiple companies: The provider’s platform has a “manage companies” functionality that lets you set up a company account for each client. So, when you’re creating and posting jobs, you select the account that you want the listings to appear in and apply the appropriate branding. Fast-growing firms that need to hire for several positions at a time: If you are planning to fill critical positions as you expand your operation to new markets, MightyRecruiter’s JobPromote feature lets you promote your jobs via its advertising partners such as CareerBuilder, LinkedIn, and Dice. This helps you get the most qualified candidates in highly competitive job markets or locations. Federal contractors and subcontractors that need labor law compliance solutions: You can stay compliant with Equal Employment Opportunity (EEO) laws and the Office of Federal Contract Compliance Programs (OFCCP) using MightyRecruiter’s reporting features. In case of an audit, you can capture EEO data (ethnicity, gender, and disability) using the candidates’ profiles. You can also use its “OFCCP Compliance” mode to track your searches and download a report in Excel or CSV format. When MightyRecruiter Would Not Be a Good Fit If you’re looking for an applicant tracking solution with other team management tools, then Homebase is your best choice. It has a job posting function and team management tools like time tracking and team scheduling functionalities―tools that MightyRecruiter does not offer―which are ideal for restaurants and retailers. If you need many talent acquisition features, then SmartRecruiters is a great alternative. Aside from multiboard job posting, you can take advantage of features that MightyRecruiter doesn’t offer such as pre-integrated assessments, workflow management, multiple candidate screening and interview scheduling, offer management, onboarding, and post-to-hire metrics. Also, it has a SmartGlobal tool, which comes with multilanguage customer support that can help you search for candidates around the globe. MightyRecruiter Alternatives At-a-Glance MightyRecruiter Pricing All MightyRecruiter services are free. Each account includes full access to its job posting and applicant tracking tools and unlimited resume searches, users, and open jobs. MightyRecruiter Features MightyRecruiter is designed to help streamline your talent sourcing processes. It allows you to post on multiple job boards, design your own career page, and use over 200 job description templates that fit your posting requirements. With over 22 million resumes in its database, it helps you find the best candidate with its machine learning algorithm—all for free. Let’s take a look at some of its essential features. MightyRecruiter Ease of Use Intuitive interface User-friendly controls Knowledge base with extensive how-to guides like e-books, case studies, infographics, and webinars Dedicated account manager for all users Overall, MightyRecruiter has a straightforward interface with user-friendly controls. It made postings jobs, screening, rating, tracking, and communicating with candidates a lot easier. In addition, it has a rich resource center that includes case studies, e-books, and webinars. All users have access to a dedicated account manager in case they need assistance. However, it offers phone support only on weekdays: Monday to Friday, 8 a.m. to 8 p.m. Central time. So, if you ever need support on weekends, you have to send a request through email. What Users Think About MightyRecruiter There are very few up-to-date MightyRecruiter reviews online as of this writing. Those who left positive feedback said that it makes posting jobs easy and has straightforward candidate communication tools, ultimately making it easier to hire employees. Some also appreciate that it is free yet has robust applicant tracking features. Meanwhile, users complained that sometimes its support team responds late and job posting approval takes 24 to 48 hours. At the time of publication, MightyRecruiter earned the following scores on popular user review sites: Capterra: 4.1 out of 5 based on about 70 reviews G2: 4.1 out of 5 based on 25 reviews Bottom Line If you’re looking for applicant tracking software with a candidate matching and ranking system and one that is EEO- and OFCCP-compliant, then MightyRecruiter is a good choice. It lets you post and promote your jobs to leading job sites; search more than 22 million resumes; screen, rate, track, rank, and communicate with candidates; and manage employee referrals. You can even get in touch with a dedicated account manager at no extra cost. If you want to learn more about its functionalities, sign up for MightyRecruiter.

An employee handbook is a reference document for employees to learn about key company policies like benefits, dress code, and work schedules. It also covers employee rules and expected behaviors. For business owners, maintaining an up-to-date employee handbook ensures employees always have access to accurate companywide information regardless of their manager or department. Likewise, a comprehensive handbook can help supervisors manage employees more consistently. Free Employee Handbook Sample Using an employee handbook template for small businesses can simplify the process of creating your own while ensuring that you include all of the necessary sections. You can also use a dedicated employee handbook builder or work with your current HR services provider to draft a handbook that fits your needs. Our free downloadable employee handbook sample was created by one of our in-house HR experts and covers policies all businesses should consider for their own handbook. We picked these sections because they’re valid for small business owners in all 50 US states. Keep in mind, however, that the sample doesn’t cover all of your business’s unique policies. What’s more, it may not be in-depth enough to meet certain state requirements, like mandated sick leave or Equal Employment Opportunity (EEO) protected classes (e.g., sexual orientation or identity). Before you finalize your handbook, check local laws—like those governing sexual harassment—to make sure your handbook is complete. Sections to Include in Your Employee Handbook There are several sections that business owners should include in their employee handbooks. For example, make sure the handbook addresses corporate culture and important legal documents—like nondisclosure agreements and policies—that will protect you and your employees. When drafting an employee handbook, consider including these sections: Introduction to Company and Values: Use the beginning of the employee handbook to share your company’s mission statement, as well as why and how you were founded. Touch on Company Culture: Company culture is an expression of a business’s personality and atmosphere. Use the employee handbook as an opportunity to describe the leadership style, mission, values, and other elements of the company’s identity. Nondisclosure and Noncompete Agreements: A nondisclosure agreement (NDA)—or confidentiality agreement—protects a business’s proprietary information by limiting the information an employee can share with others. A noncompete agreement prevents terminated employees from taking your business’s clients or starting a competing business. Anti-discrimination Policy: This portion of an employee handbook helps you comply with federal labor laws that aim to prevent discrimination in the workplace. Use a portion of your company’s employee handbook to outline relevant federal anti-discrimination policies, as well as any additional requirements imposed by state law. Compensation and Benefits: An employee handbook is an excellent place to detail how the company pays employees, how frequently, and on what day(s) of the month. From here, you can also go into detail about additional perks, like flextime, commuter benefits, and health insurance. General Employment Information: This section should clearly define a company’s probationary period (where applicable) and the steps that should be taken if an employee wants to quit. Use this section to detail the concept of at-will employment as well. If your company hires at-will employees, you or the employee is free to terminate the employment relationship at any time and for any reason. Computer and Technology Policy: Use your employee handbook to spell out your rights as an employer to view and access electronic documents and company electronics like computers. This is also a good place to establish a policy for updating passwords, provide tips for keeping passwords secure, and clarify your cellphone usage policy. Leave Policies: Let employees know what your paid time off, sick leave, parental leave, and other leave policies are and when they apply. This is also a good place to list company holidays and define the jury duty policy. Progressive Discipline Policy: For the business owner, this is a good section to define steps that will be taken under the company’s progressive discipline policy. It should also clearly identify prohibited behaviors and include a reminder that at-will employment remains in effect, regardless of the discipline policy. Signature: The signature section of an employee handbook verifies that the employee received a copy of the document, read it, and understood it. This step makes the employee take it more seriously and may help as a defense in case of a wrongful termination lawsuit. Services like can help you draft an employee handbook acknowledgment form. Depending on the nature of your business, it may also make sense to include some or all of the following sections: Attendance policies Expense reimbursement procedures Alcohol, weapons, and drug policies Dress code Remote work guidelines Legal Considerations When Creating an Employee Handbook In addition to keeping your company’s employee handbook relevant by including content that’s tailored to your business’s size, location, culture, and types of employee, consider these legal factors: Where To Get an Employee Handbook Before you start developing an employee handbook from scratch, consider that you may already be working with a provider that can offer you an employee handbook sample, like our free template. Employee Handbook Costs Creating an employee handbook for your company may involve working with in-house HR professionals, a consultant, or an attorney specializing in employment. There are also annual costs associated with the maintenance of an employee handbook, but they are worth it because your employees will have access to the most up-to-date resources. You may encounter these common costs and services when drafting an employee handbook: Outsourced HR Services If you don’t have an in-house HR team, HR firms and attorneys can create a customized employee handbook. By hiring a third party that specializes in human resources and employee communications, you can protect yourself from problems that can result from a vague, incomplete, or misleading employee handbook. Depending on your needs and location, you could pay up to $5,000 for this service. Legal Review Employee handbooks that are written by business owners or HR professionals may benefit from legal review. This type of review can ensure compliance with relevant employment law and protect business owners in case of an employee lawsuit. However, an attorney may charge hundreds of dollars an hour—especially in a large market. If you don’t want to hire an attorney, companies like offer packages that make it easy to create a handbook by answering a few simple questions. The Standard Plan starts at $35 per month, and LegalZoom’s specialists can also review documents for compliance. Maintenance In addition to drafting an employee handbook, commit time every year to updating the document to reflect current policies and legal requirements. Then, have your lawyer review the updated version, and schedule employee training to make sure everyone is on the same page. Again, if you don’t want to incur legal fees, consider a monthly membership like the one available through . Bottom Line Employee handbooks are an important way to protect business owners while helping employees understand company culture, job expectations, and current policies. Having a good handbook can save you time, money, and headaches in answering employees’ questions. What’s more, a well-written handbook can serve as a defense in case of a wrongful termination lawsuit. You May Also Like… Learn how to onboard an employee, plus a free checklist Read about new employee orientation, with a checklist to keep you on track Learn to create a new hire checklist Learn how to hire an employee

The best contractor payroll services help you pay and onboard independent contractors and collect the forms you’ll need for end-of-year tax reporting. Many even offer direct deposit at no additional cost. Before deciding, it’s important to evaluate pricing because some providers have low-cost plans that you only have to pay for during the months you process a contractor paycheck. Given that one of the benefits of using independent contractors is the savings from not having to pay taxes on their income, it makes sense to consider a service that’s priced affordably. We evaluated 10 independent contractor payroll software for small businesses and narrowed it down to our top six. : Best overall contractor payroll software : Best for Square POS users that want low-cost contractor payroll services : Best for tech-heavy companies looking for HR, payroll, and IT tools to manage the entire contractor lifecycle : Best for QuickBooks users needing fast direct deposits to pay contractors : Best for companies that hire contractors who only have Individual Taxpayer Identification Numbers (ITINs) : Best for businesses looking for an affordable way to pay international contractors Best Contractor Payroll Services Compared See fullscreen table × *Square allows you to pay instantly with Square Payments if paying both contractors and employees. **Pricing is based on a quote we received. If you’re unsure which contractor payroll service is best for your business, answer a few questions in our free quiz, and we will help you decide. Gusto: Best Overall Contractor Payroll Service for Small Businesses scored the highest in our independent contractor payroll software evaluation since it provides all of the essential tools you need to manage contractor payments. It prepares and files 1099 reports and lets your new contractors onboard themselves. It even has a special pricing plan for contractors and can handle international payments if you have global contractors. Scoring 4.6 out of 5, it would have earned perfect marks had it not been for its limited customizability, tax penalty guarantee—which only includes tax errors that the provider makes (QuickBooks Payroll’s penalty guarantee includes even your tax mistakes in its highest plan)—and having to upgrade to its highest tiers to get expert advice from certified HR professionals. However, users still rated it positively, with many complimenting Gusto for its easy-to-use platform, affordably priced plans, and robust payroll features. Gusto Key Features Affordability: Gusto is one of the providers in this guide that offers affordable contractor payroll services. You only have to pay $6 for every contractor for which you process payroll in a month. Plus, you can easily upgrade to its full-service payroll if you add W-2 employees to your workforce. But, if you want to save just a little bit more, consider Square Payroll, since its contractor-only option is slightly cheaper than Gusto’s—costing only $5 per contractor monthly. Efficient pay processing: With Gusto, you don’t have to worry about handling payroll yourself. Even if you’re processing contractor payments, it provides you with automatic and unlimited pay runs. You can pay contractors via manual checks and direct deposits. While Gusto has two-, four-, and next-day direct deposit options, it only offers four-day payments for contractors. So, if you require fast payments, we recommend QuickBooks Payroll because of its standard next-day direct deposits. You may also consider Square Payroll, as it provides instant payouts through its Square Payments solution (if you use Square to pay both employees and contractors). International payroll capabilities: Gusto can help you pay contractors in more than 80 countries—provided you get its international contractor payments add-on and subscribe to either its full-service payroll packages or have one domestic worker under its “contractor-only” plan. Automatic tax reporting: Automated filings of 1099 forms are included in Gusto’s standard contractor payroll services. It will even send your contractors’ 1099-MISC forms and payday notifications via email. Self-service portal for contractors: Contractors can access their pay information and tax forms online through Gusto’s self-service portal. It also offers self-onboarding tools for new contractors, including state new hire reporting—a functionality that the other providers in this list (except Rippling) don’t offer. Custom report builder: You are granted access to a report builder that allows you to create custom payroll and employee reports. Read our Gusto Review Square Payroll: Best for Square POS Users Looking for Low-cost Contractor Payroll Services is our lowest-cost solution ($5 per person monthly) for paying contractors, and, similar to Gusto, you don’t have to pay during months your workers aren’t paid. It also prepares 1099s for each contractor and electronically delivers them. You get even more value if you already use Square POS since it integrates with the payroll software and provides free time tracking. This is great if you’re paying contractors by the hour. Overall, Square Payroll earned a score of 4.31 out of 5 in our evaluation. While it offers low-cost and efficient contractor payroll services, what pulled the scores down include its four-day direct deposits, lack of new hire reporting for contractors, and the additional customer code requirement needed to contact phone support. This is unlike most of the other software on this list, where you simply call its support team without having to provide a special code. In terms of user feedback, many appreciate its affordability and easy-to-use payroll tools. However, some users complained about its limited reporting and difficulties contacting phone support. Square Payroll Key Features Low-cost contractor payroll services: Similar to Gusto, Square Payroll’s contractor-only plan lets you pay only for the months that you processed contractor payroll. However, its monthly fee is cheaper than those of both Gusto and QuickBooks Payroll. Direct integration with Square POS: Given its direct integration with Square POS, you don’t have to purchase a separate time tracking solution if you want to capture your contractors’ actual work hours. Your staff can simply clock in/out via the Square POS. Best of all, this functionality is free. Gusto doesn’t have a similar tool that you can access for free. QuickBooks has a POS-based time clock, but it doesn’t send tip and commission details to its payroll solution for processing like Square Payroll does. Seamless time data imports: With Square Payroll seamlessly connecting with Square POS, you don’t need to manually upload time data to pay contractors and employees. It lets you import actual work hours with just one click. Efficient pay processing: You can run payroll as many times as you need—Square won’t charge you additional fees for it. It even files 1099-MISC forms at year-end and mails these to your contractors (Remote only generates 1099 forms). You can pay contractors through checks and direct deposits, although its standard direct deposit turnaround time is four days. While it offers next-day and instant payments, you need a Square Payments account—plus this option is available only if you process both employee and contractor payroll. If you’re not a Square user and want fast payouts, QuickBooks Payroll offers same-day direct deposits with its Premium plan. Self-service portal: Aside from receiving pay notifications, contractors can see their payment histories online. They can also update their personal information and download the tax forms that Square Payroll generates, prepares, and files for them. Read our Square Payroll Review Rippling: Best for Tech-heavy Businesses Needing HR, Payroll & IT Tools to Manage the Contractor Lifecycle is great for managing the entire contractor lifecycle given its feature-rich platform, which automates onboarding and offboarding processes, as well as HR and payroll tasks. To set up contractors’ online profiles on the platform, you can have them electronically sign documents and complete required forms, like the W-9. If you need to assign computers with company-approved apps to contractors, its IT tools can help you set up and deploy devices. And when your contractors have ended their contracts with you, it can send offboarding documents, revoke app access, and remotely lock company-assigned computers. Scoring 3.71 out of 5 in our evaluation, it received ratings of 4 and up in nearly all criteria—except pricing and payroll functionalities. While Rippling efficiently handles payments for all types of contractors, including those working internationally, it lacks the contractor-only plan that both Square Payroll and Gusto offer. It also only supports payments via direct deposits and manual checks. This is unlike Gusto, Square, and OnPay, which have multiple payment options that even include either pay cards or a pay-on-demand feature. However, users still rated Rippling highly, as its intuitive interface allows them to easily manage HR, payroll, and IT. Rippling Key Features Modular solutions: What’s great about Rippling is its modular solutions that allow you to select modules that you need. This may seem ideal for those who only need pay processing tools to handle contractor payments. However, its payroll module isn’t available as a standalone product—you have to purchase its core employee management platform first. Plus, Rippling can get a bit pricey if you add other features like app and device management (an additional $5 per worker monthly). For a more budget-friendly option, we recommend Square Payroll as its “contractor-only” plan is priced at only $5 per contractor monthly. Automatic payroll: Pay contractors either by the hour or at a set rate and then send payments through two-day direct deposits and manual checks. You can also add other earning types, such as expense reimbursements. If you want to capture your contractors’ actual hours worked, Rippling offers free access to its time tracking tool, wherein all approved hours automatically sync to payroll. Similar to Gusto and Remote, Rippling can even handle international payments in case you have contractors working in your global offices. Year-end 1099 reports: Rippling generates and sends 1099 forms to contractors at the end of the year, and even stores past and current tax forms for you. Apps and device management: Rippling is the only provider on our list that offers IT tools to help you manage the entire contractor lifecycle. It lets you create online accounts and passwords for company apps that your contractors will use. If you need to assign computers, Rippling can help with the provisioning processes. It even has robust deprovisioning tools to help retrieve and reassign devices, disable app access, and remotely lock and wipe data from company-assigned computers when your contractors leave. Integrates with more than 500 apps: With an extensive network of third-party software partners, you can connect Rippling to a wide variety of solutions such as accounting, legal, advertising, sales, analytics, customer relationship management, and collaboration tools. Read our Rippling Review QuickBooks Payroll: Best for QuickBooks Users Needing Fast Direct Deposits is a good option for companies using QuickBooks for accounting because payroll information flows seamlessly to the general ledger. It’s even better if you employ both W-2 and 1099 employees since it offers full-service payroll plans that include tax filing services and fast direct deposits (next- and same-day options). It scored 3.68 out of 5 in our evaluation. Some of the factors that prevented QuickBooks Payroll from ranking higher on our list include its limited third-party software integrations (its payroll module integrates mostly with other QuickBooks products) and the lack of a contractor-only plan (both Gusto and Square Payroll offer this). It is also pricier compared to the other services we reviewed, with monthly fees that start at $45 plus $4 per contractor/employee. Despite this, many users still appreciate its easy-to-use platform that makes processing payroll easy. QuickBooks Payroll Key Features Payroll tax filing while on the go: In addition to running payroll, QuickBooks Payroll lets you file taxes through its mobile apps (for iOS and Android devices). Out of all the contractor payroll services we reviewed, only QuickBooks Payroll has this functionality. Fast direct deposits: Unlike Gusto’s two-day direct deposits (four days for paying contractors), QuickBooks Payroll has a same-day option if you require fast employee and contractor payments. However, this feature is available only for Premium subscribers. While Square Payroll’s standard direct deposit timeline is four days, it has an option that lets you remit employee payments instantly (if employees use Cash App) or the next day—both provided you subscribe to its Square Payments solution. Efficient pay processing and payroll tax filings: Unlimited pay runs, automatic payrolls, and check payment options are just some of the features that you get with QuickBooks Payroll. It also automatically calculates, pays, and files payroll taxes, including year-end reporting (W-2s and 1099s), but it only automates federal and state taxes. If you want robust filing services that include local taxes, Gusto and Square Payroll are better alternatives. Read our QuickBooks Payroll Review OnPay: Best for Companies Hiring Contractors Who Only Have ITINs makes paying and hiring contractors easy for business owners. Apart from full-service payroll, automated filings (including 1099-NEC forms), and onboarding tools, it allows you to add independent contractors who don’t have federal tax or Social Security numbers into its system—provided they have ITINs (individual tax ID numbers). None of the contractor payroll services we reviewed have this feature. Scoring 3.65 out of 5 in our evaluation, OnPay received perfect marks in reporting and ratings of 4 and up in payroll and HR functionalities. It lost points because it doesn’t offer a contractor-only plan like Gusto and Square Payroll do, plus it has limited software integration options. However, users who left reviews on third-party sites like G2 and Capterra appreciate its user-friendly interface and feature-rich platform that helps them efficiently onboard and pay employees. OnPay Key Features Easy contractor system enrollments: Most independent contractor payroll software requires you to collect the worker’s name, address, and tax number (like Social Security) to verify an individual’s right to work in the US and then add their details to their systems. With OnPay, you can use the contractor’s ITIN to start system enrollment processes and file 1099 forms. While you can encourage the contract worker to get an SSN, you do need to have your contractor complete and submit an affidavit or IRS-approved document for failing to get a valid tax ID. Full-service payroll: OnPay can run unlimited payroll and process multistate payments at no extra cost. Similar to Gusto, it lets you pay employees by direct deposits, pay cards, and manual checks. However, you have to undergo OnPay’s risk assessment to determine eligibility for two- and four-day direct deposits. This is unlike the other providers in this guide, which don’t have assessment protocols for direct deposits. Automated taxes: Regardless of whether you’re processing payments for employees or contractors, OnPay will withhold the applicable payroll taxes per pay run, remit tax payments, and generate the required tax forms, including 1099-NEC, at year-end. Employee self-service tools: Employees and contractors you’ve hired can do self-onboarding and complete their information online—although, you may also opt to input all of their details directly into OnPay. Aside from new hire onboarding, your workers can also access their pay slips, employment documents, and tax forms through OnPay’s self-service portal. Read our OnPay Review Remote: Best for Businesses Looking for Affordable International Contractor Payments provides international HR and payroll services, including a full-service EoR option to help you hire international employees, process local and global payroll, offer competitive benefits packages, and more. For those with global contractors, it has a reasonably-priced contractor management solution to help simplify onboarding and payment processes. It also has contractor invoicing capabilities that allow both local and international contract workers to create and send invoices for payment. They can even set up online profiles on Remote to help you easily manage contractors, build agreements that comply with local laws, and review and approve invoices. Scoring 3.59 out of 5 in our evaluation, Remote earned ratings for 4 and up in reporting, HR features, and pricing. It’s highly rated by users given its user-friendly interface and helpful support team. While it has efficient contractor payroll tools and supports direct deposits, it scored the lowest in payroll functionalities because it doesn’t file 1099 forms at year-end and payments made via credit cards have a 3% service fee. Remote also lacks phone and chat support—if you need assistance, you can either check its online help center or contact its support team via email. Remote Key Features Solid international contractor management tools: Remote's contractor management solution not only lets you onboard international contract workers but also helps you pay them accurately. Its cloud-based solution comes with contractor invoicing, localized contracts, automated approvals, and built-in security to protect your invention and intellectual property rights. One-click contractor payments: Invoices that contractors send will appear automatically in your Remote dashboard. You can approve invoices with one click and even set up automatic approvals for specific transactions. Remote then distributes the approved payments to the contractors’ accounts either through direct deposit (processing timelines range from two to nine days) or via credit card (this comes with a 3% service charge). Local currency payouts but with simplified billing: Remote supports payments in over 170 countries, given its financial network that allows it to pay contractors in their local currencies. Note, however, that Remote’s billing statements to you to cover actual contractor payouts won’t be in different currencies. You need only to pay in the currency that both you and Remote agreed on, which is also indicated in your agreement with the provider. Customizable localized contracts: Remote offers customizable contracts localized to comply with each country’s local labor regulations. You can even send the completed contracts to contractors and have them sign these electronically. Remote also provides access to online guides that have been created by its team of legal experts to help you understand each country’s laws that pertain to contract employment. Read our Remote Review How We Evaluated the Best Contractor Payroll Services We started our search with 10 reputable payroll companies that process payroll for contractors. Using a 5-star scale that we designed specifically to evaluate contractor payroll services, we looked for essential features like automatic pay runs, direct deposits, and year-end reporting. We also compared each system’s ease of use, pricing, customer support, and online user reviews. To see our full evaluation criteria, click through the tabs on the box below. Bottom Line When finding the right solution for paying contractors, consider a company with a special pricing plan for contractors. You’ll also want to evaluate how it handles W-9 forms and 1099s—does it help prepare and file them? Contractor payroll services with online processes that are streamlined can definitely make your life much easier. We found that Gusto offers the best features with a budget-friendly price for small businesses using contract help. It is easy to learn and use and ensures you stay compliant with tax reporting regulations. It even makes adding employees to your process simple. Sign up for a Gusto plan today.

Employee benefits, some of which are required by law, are an essential part of your personnel budget and can have a direct impact on hiring and retaining top talent. Knowing what the four major types of employee benefits are can help you choose the right ones for your company, depending on your industry, employee needs, and budget. Medical Benefits Medical benefits are those directly related to an employee's health. These can include things like insurance coverage for medical expenses, reimbursement for expenses incurred, and flexible spending accounts (FSAs) that allow employees to set aside pretax money to cover healthcare costs. Some companies also offer wellness programs that promote healthy living and preventative care. Employees who participate in these programs may also be eligible for discounts on their medical bills. Insurance Benefits An employee's benefits may vary depending on their job and company, but many employers offer some form of insurance to their employees. This type of insurance can protect employees from a variety of risks, including medical expenses, loss of wages due to injury, and death. Some company benefits may be mandatory for all employees, while others may be specific to certain positions or companies. Paid Time Off Benefits Paid time off (PTO) benefits can take many different forms, but all of them offer employees a break from work. They can be used for things like taking care of a sick family member, visiting a loved one in the hospital, or just taking a much-needed vacation. Some employers also provide special paid time off benefits for parents with young children, employees who have to take care of an elderly parent, or those who are required to work during national holidays. Retirement Benefits Retirement benefits are offered by employers to employees to make retirement more financially secure. They can come in different forms, such as traditional pensions, 401(k)s, 403(b)s, or individual retirement accounts (IRAs). Each has its own benefits and drawbacks. Knowing which type of retirement benefit is best depends on many factors, including your employees’ age, career path, and income. Traditional & Nontraditional Benefits Traditional employee benefits typically include things like insurance, leave time, and pretax programs workers can pay into and sometimes get matching funds for. Nontraditional benefits, on the other hand, include everything from a company car to free lunch on Fridays. Companies often use nontraditional benefits to define and reinforce their company culture. Businesses that promote the idea of fun and camaraderie at work may have an in-house arcade or planned events on company time. Those promoting teamwork might sponsor peer-reward programs like , which combines employee recognition, performance management, and surveys into one platform. Health-conscious companies might have fresh fruit, a juice bar, or treadmill desks. Nontraditional benefits can be fluid and are limited only by your imagination, so you can try anything. If it’s not a good fit, then change it. Traditional benefits, however, are generally static and built into job agreements. Importance of Offering Employee Benefits A competitive benefits package tops the list of things high-quality applicants look for in an organization—and not providing one can take you out of the race. For instance, older generations, like Boomers and Gen X, are attracted by FSAs that let them plan for medical expenses, as well as retirement benefits that recognize that they don’t have 30 years to save. Click through the tabs below for advantages of providing employee benefits for the employer and the employee. Bottom Line Employee benefits are an essential part of your personnel budget and can have a direct impact on hiring top talent and employee retention. You should consider which benefits to include, as these can reflect your company values, promote loyalty, and help your employees with work-life balance. We recommend for small businesses that need payroll services as well as HR options and benefits. If you are interested in a PEO option with strong benefits management, then consider , which brings all HR and payroll functions into one automated platform.

Sales commission is pay an employee receives for selling a product or service your company offers. To pay sales commission, you’ll need to create your sales commission plan, determine which employees are eligible, calculate their commissions, and determine how you’ll pay them, all while ensuring compliance with employment laws. Using payroll software like can make it easy; it calculates commission payments and gives you multiple ways to pay them, including direct deposit. Sign up for a 30-day free trial. Step 1: Create Your Commission Plan It’s easy to get into the weeds when creating a commission plan. Here’s our best advice at this stage: Don’t overcomplicate it. A complex commission plan may initially seem more cost-effective for your business, allowing you to pay only on true profits. However, remember that you’ll need to decipher the complexities with each payroll run—which is why keeping it simple will make your life easier. When deciding on your commission structure, the products or services you sell will partially dictate how you pay commission. For instance, if you’re selling something with a high value, like cars or houses, then you may pay a percentage of the sale or net sale (which is the sale price minus related expenses, i.e., brokerage fees). Meanwhile, staffing agencies often use a tiered commission structure to reward longer-term goals, increasing the commission as workers move up tiers. You can also take a blended approach, paying a percentage of each sale while also offering tiered bonuses for hitting certain goals. This will make your plan a bit more complex, but it often adds substantial incentive to salespeople. Step 2: Determine Employees Eligible for Commission Regardless of your commission structure, you can choose which employees are eligible to receive commissions. Let’s discuss a retail store example. You have six regular employees who stock shelves, keep the store clean, and generally help customers. You also have two managers who oversee the team of six, handle payment transactions, and ordering. There’s also one payroll specialist on your team who manages time sheets, payroll, taxes, and deductions. Your small business wants to incentivize employees to make a sale, pushing the products you sell as customers enter the store. To achieve this goal, you’ve created a flat rate commission structure, paying each employee who makes a sale $5.00 in commission for each item they sell. Your payroll specialist doesn’t interact with customers, so they’ll be ineligible. Your managers may interact with customers, but they’re probably not actively and regularly working to sell your products. But your six regular employees? They’re the eligible employees under your commission plan. Step 3: Determine the Type of Commission Paid Once you’ve determined which employees are eligible for commissions, you need to figure out how to pay them. There are three ways to do this: Base Pay + Commission Straight Commission Draw The best and simplest option for small businesses is to pay a base wage plus commission. Depending on your industry, this may mean paying minimum wage for base pay and then commissions on top. This doesn’t require extra calculations, such as with a draw, making for a simplified payroll process. Some types of workers, like realtors, may work on straight commission. This means they don’t receive any compensation for their work except commission payments when they sell something. Straight commission employees are usually independent contractors. Make sure you understand the differences between independent contractors and W-2 employees so you classify your workers correctly and avoid compliance issues. Another option to pay your employees a commission is on a draw. Under this plan, you’ll pay employees a base wage, but before they earn commissions, they’ll need to pay back that base wage, called a draw. This is especially helpful for new employees who may not make regular sales yet. A draw gives them wages they can count on until they get up and running. For example, if you pay your employees $10.00 per hour and a flat $5.00 commission per item sold, they’ll need to sell two items per hour to pay back their base pay. Anything beyond that is a straight commission for them. Draws are usually only used in high-commission environments, like some recruiting companies, where workers can make thousands of dollars per month in commissions. Keep in mind, regardless of the type of commission plan, you still have to ensure employees are paid at least minimum wage and accurate overtime, if applicable. Step 4: Calculate Commissions Part of doing payroll includes paying employees for their earned commissions. You’ll need to calculate these commissions each time you pay out commissions to employees. You don’t have to pay commissions with each payroll, however. You can if you want, but most companies choose to pay commissions just once per month, either with the next payroll run or as a separate commission pay run. Make sure you check your state laws to ensure compliance with pay frequency—more on that below. Step 5: Calculate Payroll Taxes on Commission Payments You’re not done after simply calculating commissions—Uncle Sam wants his cut. Figuring out how much tax to withhold depends on when you pay commissions. If you pay commissions with a regular payroll run, you withhold taxes at the employee's regular tax rate. If you pay commissions outside of a regular payroll run, you have two options for tax withholding: You can withhold taxes at a flat rate of 22% You can add the employee’s base pay and commissions, classifying the total amount as regular wages for tax purposes and withhold at the appropriate rate The flat-rate withholding is simpler, but the second method may result in more accurate tax withholdings, leaving the employee with less tax owed or due at the end of the year. Ultimately, it’s a good idea to discuss these options with your employees and figure out what they prefer. Step 6: Pay Commissioned Employees Just like with regular payroll, you have options for how to pay your employees: Direct deposit Pay card Paper check Cash No matter how you choose to pay them, calculating commissions and taxes adds a layer of complexity to your payroll. To help you better manage your commissions and ensure compliance with minimum wage and overtime laws, consider using payroll software that does commissions for you. provides your small business with support and guidance to make sure your commissioned employees get paid correctly and on time. Laws Affecting Commission Pay While there are many laws and regulations you need to be aware of as a small business, there are two big ones we need to highlight. Pay attention to these, as companies often run afoul of these issues, leading to costly legal headaches. Minimum Wage & Overtime Most salespeople are required to be paid at least minimum wage of $7.25 per hour, unless they meet the exemption of a salesperson who conducts most of their sales outside the office (which applies to both minimum wage and overtime). You should have employees track their hours so you can verify at the end of the pay period if the employee was actually paid at least minimum wage. If you find an employee hasn’t been paid at least $7.25 per hour, you’ll need to make up the difference. Let’s look at an example. You have an employee who worked 38 hours and made sales for the week totaling $200 in commissions. You don’t pay them a base wage so the hourly rate for their workweek was only $5.26 ($200 / 38 = $5.26). So your company needs to make up the difference ($7.25 - $5.26 = $1.99). You’ll need to pay your employee an additional $1.99 per hour to meet the minimum wage requirements for a total additional pay of $75.62. That would make their paycheck for this week $275.62. Your employees making a commission must also earn at least one and a half times the minimum hourly wage for any hours worked over 40 in a single workweek. Taking the current federal minimum wage of $7.25 per hour, your commissioned employees must make at least $10.88 per overtime hour. This amount will include commissions earned. If a commissioned employee does not meet this minimum per week, your company must make up the difference and pay applicable overtime. As mentioned earlier, there is an exemption for outside salespeople under the Fair Labor Standards Act (FLSA). This means you don’t have to pay an overtime wage if your employees meet the exemption. To meet this exemption, your small business must be a retail or service-based company which makes at least 75% of its income from sales activities. The outside sales exemption also requires that the sales work occur outside of the place of business—at the customer’s office, for example. Pay Frequency Some states require you to pay employees on certain timelines. Your pay periods must be regular and consistent. In other words, you cannot pay employees monthly this month and weekly next month. Workers are entitled to know when they should expect their paycheck. The FLSA requires that employers pay commissions at least annually. Most pay monthly. Yet some states are more restrictive. California, for example, requires commissions be paid at least twice monthly, once earned. That’s because the California law considers commissions to be regular wages once the commission is earned and payroll must occur at least twice per month in California. Tips for Paying Sales Commissions Keep it simple. We cannot emphasize this enough. Especially as a small business, your commission plan should not be complex. Make it simple for you, your team, and your accountant. Don’t cap earnings. Many companies put a cap on the amount of commissions an employee can earn. Don’t do this. It negates the incentive that commissions provide. The potential to earn more keeps your employees motivated to keep selling. Hire right. Be clear in your job description about what you need an employee to do, including sales. Using a structured interview process will help you evaluate candidates effectively and fairly. Don’t have unreachable goals. If you set goals for your salespeople, make them reasonable. Lofty goals and stretch goals have a purpose; however, setting goals that are unattainable only serves to negate the incentive a commission plan provides. Bottom Line Paying commissions is a great way to motivate your employees to make more sales. This helps them by paying them a small commission on everything they sell and helps your company make more money. By understanding how commission pay works, you’ll have an easier time managing all the compliance laws regarding your commission payroll.

Both employers and employees are responsible for payroll taxes. Federal tax rates, like income tax, Social Security (6.2% each for both employer and employee), and Medicare (1.45% each, plus an additional 0.9% withheld from the wages of an individual paid more than $200,000), are set by the IRS. However, each state specifies its own tax rates, which we will cover in more detail below.  If you need help calculating, paying, and filing payroll taxes, consider using . It houses tax rates for all states, so you don’t have to research. And if Gusto makes a mistake or pays late, it will cover any penalties you incur. Try it free for 30 days. Federal Payroll Tax Rates There are two categories of employment taxes at the federal level in addition to income tax: FUTA and FICA. We’ll cover each briefly as you’ll process these as tax deductions on employees’ paychecks. You must also pay these taxes on your employees’ behalf, regardless of the state in which you operate. Income Tax: The tax rate is based on withholdings chosen on the employee’s W-4 form. FUTA: This 6% federal tax on the first $7,000 of each employee’s earnings is to cover unemployment; in most cases, you’ll be credited back 5.4% of this amount for paying your state unemployment taxes on time, resulting in a net tax of 0.6%. FICA: This 15.3% federal tax is made up of two parts: 12.4% to cover Social Security and 2.9% to cover Medicare. Social Security has a wage base limit, which for 2022 is $147,000. For employees earning more than $200,000, the Medicare tax rate goes up by an additional 0.9%; therefore, FICA can range between 15.3% and 16.2%. State Payroll Tax Rates Some states have an income tax; others (like Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming) don’t. The two states that tax investment income but do not assess personal income taxes are Tennessee and New Hampshire. However, all states have state unemployment taxes. The percentage of State Unemployment Tax (or, SUTA) varies by state. Each state determines the wage base or minimum earnings required for SUTA to be deducted. Others may refer to it as unemployment insurance (UI). Also, the SUTA rates are affected by an employer’s specific unemployment history and industry. Besides, some states assign a generic new employer rate that may be higher or lower than what the employer will pay once it has been in business for a period of time, and each state determines the time frame. For example, if one employer has higher unemployment claims than another, that employer will pay a higher unemployment rate. Below, are the most common state taxes that employers need to be aware of: How To Pay Federal & State Payroll Taxes It’s best to set aside money for employment taxes each pay period, even if you’re only required to send payment monthly. You definitely need to withhold money from your employees’ paychecks each period. You will either need to deposit payroll taxes on a monthly or semiweekly basis. If you owed $50,000 or less in taxes for the prior year, you can pay monthly; anything more than that puts you on a semiweekly pay schedule. If you’re a new employer, you’re automatically placed on a monthly deposit schedule. For employers with very little payroll tax obligation (less than $2,500 a quarter), deposits can be made quarterly with the 941 tax return. Federal Employment Tax Due Dates If you determine your business needs to be on a monthly deposit schedule, you’ll need to deposit your employment payroll taxes (FICA and federal income taxes) by the 15th of the following month for which they’re due. Semiweekly schedules require that taxes for wages paid Wednesday, Thursday, or Friday be made by the following Wednesday. For wages paid on other days of the week, tax payments should be made by the following Friday. Semiweekly Deposit Schedule One important thing to note is that if you accumulate $100,000 or more in taxes, regardless of your deposit schedule, you must deposit the taxes by the next business day. State Tax Due Dates Not all states have a state income tax. However, in states that do, the employee must be asked what amount to withhold from the paycheck. That amount is to be withheld by the employer and paid to the state. The income tax rate varies by state and person based on factors such as their marital status and the number of exemptions they claim. Employees provide this information on the equivalent of a federal W-4 form, which may be called by a different name in each state. For example, South Dakota has no state income taxes, while North Dakota does and uses the Federal W-4 to track withholdings. New Jersey also has state tax withholdings and tracks them on a Form NJ-W4. Quarterly Tax Payment Due Dates Quarterly FUTA taxes are due if you owe more than $500 in taxes each quarter. The due dates are: Quarter One: April 30 Quarter Two: July 31 Quarter Three: Oct. 31 Quarter Four: Jan. 31 However, SUTA tax due dates vary by state. For example, in Michigan, the taxes are due on the 25th of the month instead of the end of the month: April 25, July 25, Oct. 25, and Jan. 25. Failing to meet the deadline may result in a penalty or late tax payment interest assessment. Therefore, you not only have to know what taxes to withhold and pay but also when and how to pay it—by state. Filing Tax Forms To file employment taxes with the IRS and other agencies, you’ll need to use specific payroll tax forms so it’s clear what and how much you are paying; the forms have formulas that will help you calculate how much you owe, and the typical filing requirement is quarterly or annually. You’ll need the following payroll forms when you file your employment taxes: IRS Form 941 or Form 944 for federal income and FICA taxes Form 940 for federal unemployment taxes State income and/or disability tax forms, if applicable to your location Municipal or local tax forms, if applicable to your location You must deposit the taxes by the respective due date to avoid interest and penalties and maintain compliance with payroll laws. If you pay independent contractors, you won’t need to pay or file taxes for them, but you will need to send in a 1099 form to the IRS (and the contractor) to show the total earnings you paid them throughout the year. Penalties for Missing or Late on Employment Tax Payments If employers fail to remit payroll tax payments or send them in late, it could have the following impact: Employers may face criminal and civil sanctions Employees may lose access to future Social Security or Medicare benefits Employees may lose access to future unemployment benefits If you’re late making deposits for FICA or federal taxes, you’ll be charged penalties as follows: Bottom Line Paying your payroll taxes correctly and on time is an important part to becoming a successful employer, but it can become challenging as you grow. Tax rates change from year to year, especially state payroll tax rates, and you must keep track of them to accurately calculate your business and your employees’ tax obligations. Using a payroll provider like will help ensure you are always up-to-date on federal, state, and local payroll tax rates. The system calculates taxes according to federal and applicable state tax rates in its database. In addition, it files the taxes to the IRS and other tax agencies at no extra cost to you. Try it free today.