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Why would a company outsource to Bottom-Line?
How does an arrangement with Bottom-Line work?
What taxes does an employer owe?
What is the difference between an employee and an independent contractor (self-employed person)?
What is workers' compensation insurance? Do I need it?
What payroll records should I keep? How long should I keep them?
Why would a company outsource to Bottom-Line?
Using Bottom-Line allows business owners and managers to focus on
their core competencies. Not worrying about the non-revenue related
activities of employment. Many businesses don't have the internal
expertise, capability or desire to handle regulatory compliance, risk
management, payroll, employee benefits administration and other
employment related activities.
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How does an arrangement with Bottom-Line work?
When a company engages our services, we assume responsibility for
obligations related to human resources, workers' compensation,
payroll, labor law compliance and employment taxes. If the company
wants to make employee benefits available to the workers, we will
offer the workers health insurance, disability insurance and other
expanded benefits under their overall corporate plan.
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What taxes does an employer owe?
Employers are responsible for paying federal Social Security tax
(FICA) (6.2% of gross wages paid, the same as the amount paid by the
employee), federal Medicare tax (1.45%, the same as the amount paid by
the employee), and federal unemployment tax (FUTA) (generally 0.8% if
you pay all state unemployment taxes on time.) Non-profit
organizations are exempt from FUTA.
Employers will owe additional taxes to the state in which they reside,
such as state unemployment (SUI) and state disability insurance (SDI)
taxes. (Non-profit organizations may be able to choose a reimbursable
status for SUI.) In some localities, employers will owe local taxes.
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What is the difference between an employee and an independent
contractor (self-employed person)?
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 has the right to control what must be done and how it
must be 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.
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What is workers' compensation insurance? Do I need it?
Workers' compensation is a state-administered program to pay for
injuries that arise out of, or 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. If you are a household employer, you can usually add
a rider to your homeowner's, renter's, or general comprehensive
liability insurance policy.
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.
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What payroll records should I keep? How long should I keep them?
State and federal and sometimes even local city laws impose numerous
record-keeping requirements on employers, including household
employers. For example, the federal Fair Labor Standards Act requires
employers to retain, for a minimum of 3 years, payroll records that
include each employee's name, address, and occupation; hours worked
each day and week; wages paid and date of payment; amounts earned as
straight-time pay and overtime; and any deductions. You must keep
records of Income Tax Withholding, FICA and FUTA taxes for four years
after the due date of the tax or the date the tax is paid, whichever
is later. State unemployment laws typically require employers to
retain, for a minimum of 4 years, records of each employee's work
status, pay for each pay period, and when and where services were
performed.
You may want to retain household payroll records for up to 15 years to
support your own individual federal income tax filings. The IRS has 3
years to assess an individual income tax return and an additional 10
years to begin collection proceedings, after which payment refunds can
be made for up to 2 additional years.
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