Finimpact

Frequently Asked Questions (FAQ)

What Is a Business Wage Garnishment?

There are 6 kinds of business wage garnishment – child support, creditors, bankruptcy orders, student loans, tax levy, and wage assignments. This is a court order that the employer has to comply with. And you cannot terminate the employee to avoid compliance.

Only a portion of the employer earnings can be taken. To process the court or government order, you would withhold a proportion of the employee earnings and send it to the creditor. The garnishment can be challenged, but the whole thing is a pain for the business owner.

Can a Payroll Check Be Handwritten?
Yes, though this is going a little out of fashion right now. Some traditional businesses in law and finance like to write their own personal checks, as it does have a level of old school prestige associated with it. Handwritten checks can be stolen with a forged signature.

Checks are still the main way that businesses pay one another for services (“B2B”), but it is quite rare to pay employees this way. Checks are still used to pay for once-off professional services such as lawyers and business consultants.
What Are the Most Relevant Payroll Forms to Account For?

These forms have already been mentioned above. They are:

  • Form 1099 and W9 (freelancers/independent contractors),
  • Form W4 and I9 (regular employees).
  • Form W2 (end of the year to IRS)
  • Schedule C (Sole Proprietorships or single-member LLC)
  • Schedule K (Partnerships, S-Corp or multi-member LLC)
  • Schedule SE (for self-employment taxes, if applicable)
What is a “Full Service” Payroll Provider?
A full-service payroll provider is typically one that allows for both workers and freelancers, as well as all of the standard tax documentation. A full-service payroll provider goes beyond the basics of payroll calculations. It will handle deposits and withdrawals, withholding and paying garnishments, and new-hire reporting. It will also file federal, state, and local taxes.

The ability to fulfill comprehensive HR solutions is beyond the scope of a payroll provider, and you will often need a separate service. But some services, such as Gusto, do offer HR capabilities on their premium packages. The fields of payroll, accounting, and HR do overlap a little, but few (if any) cater succinctly to all three areas.
For How Long Do I Have to Keep Employee Wage Records?
According to the EEOC page:

“ EEOC Regulations require that employers keep all personnel or employment records for one year. If an employee is involuntarily terminated, his/her personnel records must be retained for one year from the date of termination.

Under ADEA recordkeeping requirements, employers must also keep all payroll records for three years. Additionally, employers must keep on file any employee benefit plan (such as pension and insurance plans) and any written seniority or merit system for the full period the plan or system is in effect and for at least one year after its termination. Under the Fair Labor Standards Act (FLSA) recordkeeping requirements applicable to the EPA, employers must keep payroll records for at least three years.
Should I Just Hire an Accountant?
There is no longer a real need to hire an accountant. You are “hiring” an online payroll processor that is doing all of the heavy lifting. If you are medium to large-sized businesses, then you may want to have a dedicated accountant. But most businesses can just consultant an attorney on a freelance basis for maximum return on investment.

There is little need for an in-house accountant for businesses with less than 50 employees. It is just not worth it in the modern age with sophisticated software that automates most of the manual tasks.

About the Author

Daniel Lewis

Daniel Lewis

MBA accredited investment professional

Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance.

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