Keeping Proper Payroll for a Septic Contracting Business

Payroll for a construction industry company should be a special consideration for management and ownership. The “boots on the ground” are much more difficult to find within the industry – the finite number of properly bonded and insured employees with the proper experience limit the amount of turnover that any company can handle.
Management and ownership must take great pains to ensure that payroll is smooth and seamless. Here are a few ways to help yourself keep proper payroll for a septic contracting business.

Proper Classification
IRS Publication 15 will keep you in compliance with tax law when it comes to classifying your employees. You may agree with a worker to render payment as an independent contractor; however, this may not fly when it comes to the legality of the situation. In general, you must classify your company under a different service type than the service the employee renders, but the tax code is always changing, and you should run all of your notes by a tax attorney and accountant before you commit to anything.

Outsourcing Payroll
Most companies outsource their payroll to a bank or to a third party payroll specialist company. The more traditional method is through a local bank. Try to use a bank that you already have a relationship with. In many cases, a local bank that you frequent will give you payroll processing as a courtesy, which means that it will be much less expensive than a third party specialist.

Including Taxes Within the Budget
Many companies forget about the payroll taxes that must be paid to the state and federal government until tax time, which can be a big problem. If there is any Medicare or Social Security that is withheld from the employee, the employer is required to match both of those figures. This is equal to 7.65% of an employee’s gross pay.
Employers may also be responsible for the FUTA tax, which is used to fund the federal unemployment fund. IRS Publication 15 has the information that you need about this tax and other taxes that you may be responsible for depending on the state in which you do business. You should take great pains to include these taxes in your budget forecasts for the year.

Automating Tax Deposits
If you have a top tier payroll processing partner, you may be able to automate your state and federal tax deposits. This will take a great deal of pressure off of your internal accounting, and you will naturally budget that money for taxes instead of spending it.
If you do not keep up with your deposits for payroll taxes, the compounding interest, fees and penalties can become very expensive very quickly. Penalties can rise to as much as 100% if a business does not pay the withholdings to the state by certain due dates. These dates are given in IRS Publication 15. Although you may be doing business with a third party payroll processor, you should always double check to see that the deposits were made on time. Final responsibility always falls on the business owner, not the third party processor, in the eyes of the IRS.

Paying Benefits
If you are trying to reward an especially productive worker, consider giving that worker his or her bonus or raise in the form of a benefit rather than a direct raise. This will keep your payroll records secure and up to date, and your employee will gain the equivalent of a cash payment plus the convenience of receiving the actual benefit.
Many benefits that employees are looking for in the septic industry include health and dental insurance, subsidies for child care, or even some money placed into a retirement plan. If you are looking to give bonuses and benefits, you can look to IRS Publication 15-B to ensure that you do not incur extra taxation because of a greater outlay of funds.

Health Insurance
Since 2014, businesses located in the United States with more than 50 employees are required to provide health insurance. Depending on the scale of your business, you may need more than 50 people on staff. If this is the case, you must take special pains to classify the people who work for you properly. The right classification will allow you to take on more than 50 workers without taking on the extra burden of the Patient Affordability Act.
Keep in mind that you do not have to deny any of your workers health insurance; the right classification simply ensures that you are disseminating the benefit in the most cost effective way. In the case that you are not able to avoid classifying more than 50 people as employees, you will not be required to pay the actual premiums for health insurance plans, but you will need to have a plan in place. Employees may choose to participate in that plan or not.
The way that you conduct your payroll will directly affect your business in the septic industry. The morale of your workers is directly tied to the organization of your payroll. You can attract a higher level of employee the more that you look into conducting your payroll in an organized way, so take the time to find the right partner for your individual needs in the industry. Your employees will thank you, and your business will have a greater chance to flourish.

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