Q: Why do I need payroll at all? Would it not be easier to just set up the employee as a subcontractor?
A: Unless the employee has his/her own business, such a practice is highly illegal. Please click HERE to determine if such an employee may actually be classified as a subcontractor. Any employer that inappropriately classifies an employee as a subcontractor may face stiff penalties from federal and/or state tax agencies as well as unemployment divisions. By using APS you buy a peace of mind.
Q: Who would ever know if I paid an employee as a subcontractor? Could this simply not be hidden and nobody would ever find out?
A: In a perfect world, the “employee” would do his/her job and be paid accordingly. In many instances the person themselves would undoubtedly not want to be taxed and most definitely want to keep more money in his/her paycheck. However, if that person was to be laid off or fired, most likely that person would want to go after unemployment compensation. This is one area where problems would arise, because as a subcontractor no unemployment was ever paid on their behalf! Furthermore, this will raise an unwanted inquiry for the employer as to the working relationship. The employee would also have to file estimated quarterly tax payment. At the end of the year, rather than receiving a standard W-2, the person would get a 1099 and therefore have to prepare a Schedule C* on their individual tax return. This would more than likely result in the individual getting hit with higher taxes than what would otherwise be due. Setting up a payroll system will avoid big headaches such as these for the employer and employee.
* An interesting point arises where an individual receives a letter from the federal/state tax departments asking information about a person’s schedule C, requesting information such as cash register tapes, expense details, etc.. The problem is that because the person does not really have a business, none of the items requested usually exist. In such cases the employee reports back that this is not his/her business but rather that of the employer. This then leads to unwanted inquiries on behalf of the employer.
Q: I am very busy, how long will it take to set up my payroll?
A: We try to make the changeover entirely painless. Our experts will transfer data from your payroll account or, if you are using an outside service, we will utilize their records to transfer the data. In either case, just a few minutes of your time will be needed to help with the transition.
Q: What happens when I hire more employees, can I add them to my payroll at any time?
A: You may add employees at any time. We will provide you with new employee forms that can be filled out when you are taking W-4 information and then faxed to us.
Q: We are a small start-up company with 8 employees, what is the advantage to having American Payroll Services, Inc. do our payroll?
A: Since we are also a small, independently-owned company, you will find us much easier to deal with than the larger national companies. We are equipped to handle your company from start-up to whatever size you may grow.
Q: Do you offer direct deposit?
A: Yes. Direct deposit is a great service to offer to your employees. Your employees may choose up to 3 different accounts to deposit.
Q: Do all my employees have to participate in direct deposit?
A: No. There is no minimum participation.
Q: How can I report our hours/wages each pay period?
A: There are several methods available, ranging from phone, fax, and our PC input system. You decide which system works best for you, with the freedom to change methods at any time.
Q: Our company has unique payroll needs; can American Payroll Services, Inc. personalize our account to suit our needs?
A: Our system is completely flexible. Unlike most payroll companies, we don’t require your company to conform to our system. We work with you to determine your payroll needs and identify problem areas. Then we adapt our system to provide you with the best payroll solution.
Q: We currently have another firm handling our payroll but want to switch, what is involved in changing over, including costs?
A: Switching from another payroll company is extremely simple. We generally use the existing quarterly and payroll histories from the previous company, to input into our system.