Don’t pay less than minimum wage Don’t make so many deductions that the final paycheck amount is so low that it makes the ex-employee earn less than minimum wage for the timeframe. Complicating the matter is that the calculation is based on applying the deductions to only the first forty hours of work in a week. You generally can’t include overtime hours in the calculation. Don’t delay the payment It’s usually okay for an employer to sue your company if their last paycheck is delayed for longer than 30 days. In most states, it is recommended that the last paycheck be distributed according to the normal paycheck cycle. Don’t ignore state-level laws Many times, state laws can affect your decisions about what is included in the last paycheck. As a business owner, ask your HR and payroll people if they know how to handle situations like: Should we hold onto the last paycheck until the employee returns their company phone? Can we make the employee sig ...

Here's a few "heads up" tips to take into account when issues the last paycheck to a former employee. Issue quickly Many times, the last paycheck is associated with a termination or an employee quitting. In either case, tensions can be high and misunderstandings are easy to create. It’s usually best to just cut that last paycheck and get that out of the way, rather than delaying and creating the appearance of “punishing” the former employee. In lawsuits, it’s common practice to assume a jury wants to see that the company acted in a fair manner. Any unnecessary burdens you place on an ex-employee can be a detriment if a lawsuit arises out of the situation. Keep in mind the deductions applicable When cutting that last paycheck, try to make sure you are using a legal and appropriate methodology when applied to cashing out saved-up vacation and sick time. Also pay attention to the different levels of law that can affect the paycheck calculation. Occupational Safety and Health Admi ...

A California couple that owned three roofing contractor businesses were arrested in 2010 for fraud. Recently, they were ordered to pay over $2,8 million in restitution. In 2006 one of their employees fell from a roof and submitted a payroll stub to California’s State Fund Compensation Insurance. After realizing they did not insure the company indicated on the stub, SCIF notified the authorities. During the investigation, it was revelaed that the couple, Devon Lynn Kile and Michael Vincent Petronella, submitted 42 claims that turned out to be fraudulent. In addition, they underreported over $10 million in payroll expenses to avoid paying workers’ compensation insurance premiums. This totaled to over $30 million in workers comp insurance premium fraud. In addition, during raids on several properties owned by the couple, the authorities found over $50,000 in cash, $500,000 in jewelry and three luxury cars worth over $100,000 apiece. They also found over $2.1 million in credit card debt used on ev ...

If you have a company with even only a few employees, you still need to know how to use the payroll tax calculator. To take the easy route, just use our online free payroll tax calculator.  Many times, businesses will contract the duty of payroll processing to an outside company. But you still need to know how to use a payroll tax calculator…even if you have to use an old fashioned calculator to get the job done! Here are the steps for calculating payroll taxes: The first step in the payroll tax calculator is figuring out the employee’s gross pay. This should include hourly wages or salary and tips, commissions and any other taxable compensation. Do not include mileage or other reimbursements for business expenses. The next thing you should do is multiply the number of withholding allowances the worker has claimed on his or her W-4 form by the amount of one allowance for his or her filing status (and the length of the pay period). You should also be sure to subtract any ta ...

The Internal Revenue Service (IRS) is sharing information required to start reporting payment card and third-party network transactions to the IRS on the new Form 1099-K. Reporting is required beginning in early 2012 for payment card and third-party network transactions that took place in 2011. Here is some helpful information from the IRS on this topic: Section 6050W was added by Section 3091 of the Housing Assistance Tax Act of 2008 and requires information returns to be made by certain payors regarding payments that are made in settlement of a payment card transaction and third party payment network transactions. Payment settlement entities are a domestic or foreign group that is a merchant acquiring entity. A merchant acquiring entity is a bank or other organization that has the contractual obligation to pay the participating merchant (or payee) in settlement of payment card transactions). The entity that submits the instruction to transfer funds to the participating payee must rep ...