Frequently Asked Questions

Here are the most common questions we receive from new employers. If you have additional questions, please call PayrollAccountantLive.com Customer Service toll free 1-866-730-2729, Monday through Friday, 8:30am to 6:30pm Eastern Standard Time.

Q. Do I need to register as an employer?

A. You must register with both the federal government and your state when you hire your first employee. When you register, you are assigned a federal employer identification number (FEIN) and usually, a state employer identification number (EIN). In some states, you register with both the state revenue agency and the unemployment insurance agency. When you set up your PayrollAccountantLive.com account, we provide information and links to federal and state registration applications.

You won’t need identification numbers until it’s time to pay and file taxes, so you can run payroll before you receive your numbers. The fastest way to register and receive an FEIN is online.

Q. How do I know how much to withhold?

A. Have each employee fill out a Form W-4 to tell you their status and allowances. As you set up each employee in PayrollAccountantLive.com, you enter this information. PayrollAccountantLive.com can now calculate withholding taxes. You may also withhold voluntary deductions, such as health insurance or retirement plans. PayrollAccountantLive.com also supports involuntary deductions such as garnishments for which you receive a court order that explains the amount to withhold.

Q. Is my contractor really an employee?

A. The amount of control the employer has over the worker determines whether or not the worker is an employee or an independent contractor. If the employer controls what must be done and how the work gets done, and supplies the tools to complete the work, then the worker is an employee. If the worker controls how the work is to be done, the worker is self-employed. Self-employed workers usually provide their own tools and have independent businesses serving multiple clients. See IRS Publication 15, Circular E: Employer’s Tax Guide for more information regarding whether a worker is an employee or a contractor. (The PayrollAccountantLive.com Resources/Federal Government Resources page contains links to this publication.)

Q. As the owner of a business, am I considered to be an employee?

A. The owner, sole proprietor, or partner in a small business does not earn wages and is not considered an employee (some LLC members and S Corp owners are also not employees). Do not set up these individuals as employees in your PayrollAccountantLive.com account. To confirm a worker’s employment status, talk to your accountant or see IRS Publication 15, Circular E: Employer’s Tax Guide (the PayrollAccountantLive.com Resources/Federal Government Resources page contains links to this publication).

Q. What forms must I file?

A. PayrollAccountantLive.com will let you know which federal and state payroll forms you must complete by adding them to your To Do list. You can check your To Do list at any time by clicking the “To Do” tab at the top of every page. In addition, PayrollAccountantLive.com sends you an email reminder when it’s time to file a form (state forms are included with PayrollAccountantLive.com Payroll Plus only).

PayrollAccountantLive.com not only provides the necessary tax forms, we fill them out for you. You can look in the Taxes & Forms tab or click the name of the form on the To Do list. Often you can just print the form from the PayrollAccountantLive.com site, sign it, and send it to the address we provide. (Some jurisdictions require that you use original, scannable forms. In these cases, PayrollAccountantLive.com provides a worksheet to make it easy for you to copy your information to the original form. The worksheet provides the exact data you need to enter on each line of the form.)

In some localities, employers must file local tax forms (with school districts, health agencies, cities, or counties). PayrollAccountantLive.com does not supply local tax forms.

Q. When do I pay and file taxes?

A. PayrollAccountantLive.com sends you an email whenever a tax must be deposited or a tax report filed. Each tax agency establishes deposit schedules for employers based upon the size of the employer’s liability. Because you are a new employer, PayrollAccountantLive.com knows the deposit schedules that apply to you. In addition to the email, you’ll see your tax payments and filings on your PayrollAccountantLive.com To Do list. (State taxes are included with PayrollAccountantLive.com Payroll Plus only.)

Q. What is workers’ compensation insurance and do I need it?

A. Workers' compensation is a state-administered program to pay for injuries that occur in the course of employment. Workers’ compensation insurance is required for nearly all employers in all states. If you are a small business employer, consult your insurance broker.

It is very important that you have adequate workers’ compensation insurance. Otherwise, if your employee is injured on the job, you may be personally liable–not only for the cost of medical treatment, but also for disability payments during the period in which the employee is unable to work. You can find what is required in your state. The PayrollAccountantLive.com Resources/Federal Government Resources page provides a link to the state table on the Office of Workers’ Compensation Programs Web site.

Payroll 101, Part III: Payroll Tax Reporting and Forms

Now that you’ve given all your employees accurate paychecks and paid all the payroll taxes you owe, you’ve got one more responsibility: filing tax forms. This section provides an overview of the types of form filings required of all employers.

PayrollAccountantLive.com prompts you whenever you have a tax form filing due. Remember: you must file tax forms each quarter, and at year-end, even if you have already paid all the taxes you owe! It’s very important to follow your PayrollAccountantLive.com To Do list: if it’s on there, it’s something you need to do.

Federal Forms

Form 941. Most employers file this tax form every quarter with the IRS. It compares federal payroll taxes owed with taxes paid during the quarter to determine whether your payments were timely and whether you have a balance due.

Form 944. Employers who have received written notice from the IRS may file Form 944 annually instead of Form 941 each quarter. Like Form 941, it reports wages and calculates federal payroll tax liability. Most 944 filers also pay taxes once a year.

Form 940. All employers who pay FUTA file this tax form at year end with the IRS. Like Form 941, it compares FUTA tax liability with FUTA tax payments to determine whether your deposits were timely and whether you have a balance due.

Form W-2. All employers provide Form W-2 to each employee at year end as an earnings record for income tax filing purposes. You are also responsible for filing Form W-2 with the Social Security Administration.

PayrollAccountantLive.com prepares all your federal tax forms for you. You can file Form 941 (or Form 944), Form 940, and Form W-2 electronically–with the click of a button. Or you can choose to file your 941 (or 944) and 940 on paper using our signature-ready forms.

State Forms

Wage Reports report wages paid to each employee for a given quarter. They are sometimes combined with a quarterly contribution report that calculates SUI tax owed and is typically accompanied by the SUI payment at quarter end. Most states require both a wage report and a contribution report each quarter, either as separate forms or as a combined form. (California is one exception; only a wage report is filed each quarter.) Many states also require a quarterly reconciliation for state income tax.

Annual Reconciliations. Some states require filing an annual reconciliation for income tax at the end of the year. This may or may not be accompanied by copies of employees’ W-2’s.
With PayrollAccountantLive.com Payroll Plus, PayrollAccountantLive.com prepares signature-ready state tax forms for you. In some states you may pay or file your taxes electronically. Call Customer Service to learn if this service is available in your state.
Cities, counties, or school districts that assess tax may also require quarterly or annual forms and may require copies of W-2’s. Check with each agency to which you pay tax.