Bookkeeping News & Tips

Are You A New Employer? Here Is What You Should Know About Payroll Taxes

If you just opened your business or are hiring employees for the first time, you will discover that hiring new employees is a long process. When people consider hiring employees to help with business tasks, they many times think about the interview process and finding the candidate for the job, but forget about the paperwork and tax implications involved in bringing in additional help. Payroll processing can be time consuming and overwhelming, if you do not have any previous experience in accounting or are not using great bookkeeping software with payroll features included. Below are a few tips and things you should know about payroll taxes before you hire your first employee [More]

Hiring A Seasonal Holiday Workforce? What You Need To Know!

As we approach the holiday season, many small businesses are beginning to hire seasonal workers to help with the increase in work load. If you plan on hiring seasonal workers this holiday season, there are a few things you need to keep in mind. Many of the laws and regulations that apply to full-time employees also apply to seasonal or part-time employees. [More]

Customizing Your Chart Of Accounts With TaxSlayer Books

 A chart of accounts is defined as a listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger. Each account is listed by a name and an identification number. One of the biggest advantages of using TaxSlayer Books is that it assigns a standard list of accounts for your company based on the type of industry that you select. When configuring your TaxSlayer Books software, the program allows you to choose predefined charts of accounts for different types of industry, all including basic account types of assets, liabilities, equity, income, and expense. TaxSlayer Books also offers you the option to customize your chart of accounts. Some customers like to customize their chart of accounts with the financial analysis of their company in mind, allowing them to see specifically where their profits and expenses are coming from. Customizing Your Chart Of Accounts If you selected a predefined chart of accounts and wish to add a new account to the chart, start by scrolling over Setup on the Main Menu and choose Chart of Accounts. Then click on “Add New GL Account” button. Select the type of account you wish to add, review the description provided for that account type, and click next. Make any necessary changes to the “Account Name”, assign an account number if you are using account numbers, verify the account type and click finish.   Creating Your Own Chart Of Accounts If you do not want to use the default chart of accounts in TaxSlayer Books or your industry is not listed, scroll down to the bottom of the drop down list of industry types. Choose “Empty Chart of Accounts” to build your own listing of general ledger accounts to meet your needs.    

How To Choose Calendar Or Fiscal Year For Bookkeeping Purposes

  Most businesses report their taxable income on a calendar year. But for some companies, they might find it preferable to report a fiscal year. A fiscal year is considered a 12-month period that ends sometime other than December 31. Businesses that have a specific, non-calendar business cycles, many times consider choosing to use fiscal year instead of calendar year, because they find that it provides a better measurement of how their business is actually performing in its natural, business cycle.                 Once a company has filed taxes using a calendar or fiscal year, they are basically locked into that type of reporting. If you want to change the way you report year end using calendar or fiscal year, you have to show that there is a legitimate business purpose for doing this. If your company operates on a fiscal year rather than a calendar year end, in TaxSlayer Books you can uncheck the box title “calendar year” and enter the month and day of the fiscal year end.  

Common Payroll Terminology and Acronyms

 Payroll terminology and acronyms can be complicated and confusing. The following is a very basic list of some of the most common used terms and acronyms related to payroll.   Accounting Period- The period covered by an income statement, also known as the business cycle • Examples include: month, year   Balance Sheet- A financial sheet that presents a business’s financial position in terms of its assets, liabilities, and owner’s equity as of a certain date. *Generally at the end of the company’s fiscal year   Chart of Accounts- Listing of the names of the accounts that a company has identified and made available for recording transactions in its general ledger. Each account is listed by a name and an identification number.  Disposable Earnings- The portion of earnings that remains after deductions required by law have been made• Used to calculate the maximum amount of an employee’s wages subject to a garnishment, attachment, or child support withholding order   EIN (Employer Identification Number) - The employer’s account number with the Internal Revenue Service• Consists of nine digits and is always in the following format: 12-3456789   Exempt on Form W-4- If an employee claims exempt on his or her Form W-4, the employer does not have to withhold federal income tax from the employee’s wages   FICA (Federal Insurance Contributions Act)- Includes Social Security And Medicare tax withholdings from an employee’s paycheck. The employer is required to match the total amount of FICA taxes withheld from each employee.• The Social Security portion is applied to 100% of the employee’s wages, while the Medicare portion is applied only to the amount of wages set by the IRS. *The amount applied of Medicare is changed yearly by the IRS.   FIT (Federal Income Tax)- The Federal Income Tax withheld from an employee’s paycheck, which is based on rates set by the IRS and is affected by an employee’s marital status and number of dependents.   FUTA (Federal Unemployment Tax Act)- An employer paid tax that is based on a stated wage per employee and the rate may be adjusted based on the amount contributed to your state fund.   IRA (Individual Retirement Account)- An account that allows an employee to deposit funds for retirement and incur tax advantages. *Some employers offer incentives for using retirement accounts or match pre-tax contributions.   SIT (State Income Tax)- The state income tax withholding from an employee’s paycheck. The holdings are based on rates set by each individual state. *Some states do not have income taxes from individuals.   SUTA (State Unemployment Tax Act)- Tax that the employer pays and is based on your state’s rate per a stated amount of wages per employee.   W-2 (Wage and Tax Statement) - Used to report wages and payments made to employees and payroll taxes withheld from employee’s pay during the calendar year. *Although the IRS issues the form it should be submitted to the Social Security Administration.   W-4 Form – The form filled out by new employees showing the employee’s name, address, social security number and the marital status of the employee. The form also includes the number of dependents they wish to have their FIT based on. *This form is kept on file by the company.   940 Form- Filed yearly to report wages paid, amount and date of state SUTA contributions made and any FUTA deposits made during the calendar year (federal form)