Payroll Florida, Unique Aspects of Florida Payroll Law and Practice
In Florida, the payroll process is technically divided into two separate steps. This article provides an overview of the Florida payroll process, including some unique aspects of Florida law and practice.
Payroll in general typically consists of multiple steps with a variety of documents involved. They are typically completed under government oversight with financial accounts controlled by computerized information systems. The processes can include a variety of responsibilities, such as administrative assistance to supervisors or employers, processing paychecks on behalf of an employer's financial personnel, payment assistance for individual employees who do not have bank accounts or those who cannot access online banking due to unusual circumstances. There may be additional employees hired that receive wages in the form of paper checks on a regular basis.
Types of Payroll Systems
Payroll systems vary from employer to employer, state to state. The system used will depend on the size of the company and complexity of the operation. The system can be automatic, semi-automatic and manual (i.e., no computerized payroll system is utilized). An automatic payroll system is a type of payroll system that calculates wages based on predetermined rules. A semi-automatic payroll system is a type of payroll system that calculates wages based on predetermined rules with some human involvement in steps such as verifying information or entering new employees into the system. A manual payroll process involves calculating employee wages manually, which requires much more time and effort than either automatic or semi-automatic systems.
The payroll steps are divided into three major categories which are:
In 2005 there were 10,000 Florida businesses with 75,000 employees. The state has 3 million business owners and employees. There are roughly 20,000 employers operating in the state.
When the payroll process is complete, the employer must have all of their payroll tax forms completed and submitted to the appropriate tax department within a specified period of time (usually 30 days after a payroll period). Very few state agencies require quarterly or semi-annual filing of employment taxes. As a result, most firms have their own accounting software that automatically calculates and files these taxes for them on a regular basis.
Florida law and Florida Department of Labor guides require that all Florida employers who withhold state or federal income taxes must file reports electronically. This is required because the federal government and all fifty states are gradually moving toward a completely automated payroll tax system.
Employers that do not have an automated payroll department can contact a firm to provide them with the necessary paperwork to file their employment taxes either electronically or manually. In addition, certain kinds of businesses may need other forms such as withholding certificates, garnishment forms, birth reports, employee invoices or any other financial ledgers required by law and the employer. These can be acquired at a business office, through an accountant or through a payroll service company.
The time it takes to complete the payroll process can vary depending on the size and complexity of the business. In general, new employers who have never used an automated payroll department will need between ten and twenty hours to complete their first payroll. Other employers may need between twelve and thirty hours depending on their own unique procedures.
The time can be reduced if certain steps are completed before others. For example, if all of the basic requirements such as filing employee information, entering wage data into an accounting system or even having a computer program that will automatically calculate employee wages are in place before any employee data is entered into the system. The following steps will be much faster and easier to complete when they have already been accomplished.
The benefits of using an automated payroll department also depend on the size and complexity of the business. Using a computerized system will not only save time, but will also reduce errors or payroll mistakes that would otherwise occur if employees had to enter wage data by hand each time a pay period ended. By doing this, there can be multiple pay periods before the employer comes back into contact with employees for changes in wages.
Other benefits of an automated payroll system include the ability to provide data at a later date for:
Employers who file their payroll tax returns on a paper basis are required to file their employment tax returns with the Florida Department of Revenue. They have until 30 days after the end of each period (monthly or semi-monthly) to submit their returns. Employers who file electronically must meet filing due dates as follows:
Each reporting period, employers report all wages paid, job positions and other details to the state and federal government. Taxpayers are required to document each payment made to all employees using one or more of the following methods:
The current tax rates can be found here .
employers are required to withhold various taxes from their employee's earnings. These include state and federal income tax, social security tax, unemployment insurance (FUTA), and workers compensation insurance.
In general, there are three types of payroll tax forms that can be acquired by an employer:
Calculating FICA is relatively simple. It is done on a regular basis by most businesses that use an automated payroll system. The FICA rate is 7.65% which includes 6.20% for Social Security and 1.45% for Medicare. This is the same rate for both employers and employees. The total is 12.70%. However, if an employee earns a wage that is less than $5,000 per year, then there will be no Social Security or Medicare withheld from their paycheck due to the Social Security wage base limit.
Only the employer pays FUTA at the rate of 6% on all earnings up to $7,000 per employee per calendar year. If a business pays more than $750 in wages during any calendar quarter or has more than one employee during any quarter, then it must pay state unemployment taxes. The rate is 0.4% for the first $5,000 an employer pays per employee. There are no state taxes on any wages paid for an employee who earns less than $2,000 during a quarter.
FICA and FUTA taxes are calculated at the end of each pay period at the same time as the employer calculates and records employee wage data into their payroll system. The employer must also record any FICA withholdings that have already been made to the employee's paychecks that are in effect at the time they use the payroll database to calculate their own FICA withholding amounts.
The Internal Revenue Service (IRS) traditionally sent out a W-9 form with each prompt payment of income tax by employers.
Conclusion
Employment taxes are due every month for businesses that have a subtotal of more than $1,000 and three times per year for businesses that have a subtotal of less than $1,000. Times when taxes are not required to be paid include:
Employers must calculate their own employment tax withholdings based on a variety of factors including employee wages and rate codes. The federal government and Florida Department of Revenue collect employment taxes several ways:
The payroll department is the part of the HR department that calculates how much an employer should withhold from each employee's wages based on the tax code. The process can be done by hand or electronically.