The "ADD" Accountant

Introducing Patrick Payroll

I am always wanting to give my clients more. It’s a curse, really. That being said, I am proud to share with you all the latest addition to the Patrick Accounting family of services, Patrick Payroll. As a local payroll partner, the Patrick Payroll staff will work hand-in-hand with businesses in order to implement a payroll solution that meets any and every unique need. Once in place, businesses will work with a dedicated payroll specialist throughout the payroll process to ensure continuity—reducing errors and saving time and money. We all could save a little time and money these days, right?

As part of the launch of Patrick Payroll, we have updated our advanced online client center within the Patrick Accounting website to include additional information such as new employee or changes to your employee forms, New Hire Packets, and Blank Payroll Forms.

Patrick Payroll will also provide optional services such as Pay-As-You-Go Workers Compensation, Direct Deposit Pay Cards, and Online Access to W-2s and Paystubs. To assist our very valued clients in gaining a well-rounded understanding of the additions, we will be providing a webinar to show-off these brand new features over the coming weeks.

We want to be the single source for your accounting needs, so a strategic move for us to better serve our clients was offering outsourced payroll. We want to provide maximum convenience and the best, most highly advanced technology—all your fingertips, simply and effectively.

What do you want out of your accounting firm?

2010 HIRE ACT....More info to come!

Well along with the much anticipated health insurance "reform" bill that was approved, little was made of last Thursday's new small business incentive called the HIRE act....

Be rest assured we are on top of it and have already scheduled a training seminar this Friday March 26th to learn more ourselves so that we can pass on the information and help with the implementation of how it affects you in your 2010 hiring plans.....

Here are the basics....

Extension of enhanced small business expensing (Section 179). The new law gives a one-year lease on life to enhanced expensing rules, which allow qualifying businesses the option to currently deduct the cost of business machinery and equipment, instead of recovering it via depreciation over a number of years. For tax years beginning in 2010, the maximum amount that a business may expense is $250,000, and the expensing election begins to phase out when a business buys more than $800,000 of expensing-eligible assets. These dollar limits are the same as those that were in effect for 2008 and 2009.

Payroll tax holiday and up-to-$1,000 credit for employers who hire unemployed workers. To help stimulate the hiring of workers by the private sector, the new law exempts any private-sector employer that hires a worker who had been unemployed for at least 60 days from having to pay the employer's 6.2% share of the Social Security payroll tax on that employee for the remainder of 2010. A company could save a maximum of $6,621 if it hired an unemployed worker and paid that worker at least $106,800—the maximum amount of wages subject to Social Security taxes—by the end of the year. As an additional incentive, for any qualifying worker hired under this initiative that the employer keeps on payroll for a continuous 52 weeks, the employer is eligible for an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is reached, to be taken on their 2011 tax return. In order to be eligible, the employee's pay in the second 26-week period must be at least 80% of the pay in the first 26-week period.

Workers hired after the date of introduction of the legislation (Feb. 3, 2010) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after the date of the new law's enactment receive the exemption for payroll taxes.

Here are some additional features of the new hiring incentive:

• The tax benefit of the new incentive is immediate. It puts money into a business' cash flow immediately, since the tax is simply not collected in the first place.
• The tax benefit generally applies only to private-sector employment, including nonprofit organizations—public sector jobs are generally not eligible for either benefit. However, employment by a public higher education institution would qualify. 
• There is no minimum weekly number of hours that the new employee must work for the employer to be eligible, and there is no maximum on the dollar amount of payroll taxes per employer that may be forgiven.  
  
• For workers that would otherwise be eligible for the “Work Opportunity Tax Credit,” the employer must select one benefit or the other for 2010—no double dipping.
• An employer can't claim the new tax breaks for hiring family members.
• A worker who replaces another employee who performed the same job for the employer is not eligible for the benefit, unless the prior employee left the job voluntarily or for cause.
• For the hiring to qualify, the new hire must sign an affidavit, under penalties of perjury, stating that he or she has not been employed for more than 40 hours during the 60-day period ending on the date the employment begins.
• The incentive is not biased towards either low-wage or high-wage workers. Under the measure, a business saves 6.2% on both a $40,000 worker and a $90,000 worker.
• The payroll tax holiday does not apply with respect to wages paid during the first calendar quarter of 2010, but the amount by which the Social Security payroll tax would have been reduced under the payroll tax holiday provision during the fist calendar quarter is applied against the tax imposed on the employer for the second calendar quarter of 2010.
• The Act creates a similar new set of rules permitting a payroll tax holiday for railroad retirement tax purposes.
• The credit for retaining qualifying new hires is the lesser of $1,000 or 6.2% of the wages paid by the taxpayer to the retained worker during the 52-consecutive-week period. Thus, the credit for a retained worker will be $1,000 if, disregarding rounding, the retained worker's wages during the 52-consecutive-week period exceed $16,129.03. However, the credit is not available for pay not treated as wages under the Code (e.g., remuneration paid to domestic workers).
  

So as you can see, as always, the government's help comes with lots of catches, caveats, and exceptions!  As we learn more we will share and communicate what it means for you!

Thanks

Matt

TN Unemployment Changes

You may have already received information related to 2 retroactive changes that have been passed into law in the past few weeks that relate to Tennessee Insurance (“SUTA”).  I wanted to explain the changes to you and let you know about the process for retro-paying the additional insurance(“tax”) that is being imposed.

First the TN Department of Labor and Workforce Development has imposed a retroactive rate increase across the board of .6%.  You will receive a notice of determination from the state that will look like your 1^st qtr return was done incorrectly...that was not the case, they have retroactively applied this tax and it is now a different rate than was originally imposed at the time of filing.  There will be verbage on the notice explaining the resulting amount you now owe.

Secondly and this one is a little trickier, in that it also directly affects every employer retroactively but will be imposed on your 2^nd qtr TN Unemployment return.  The overall wage base will increase from $7000 to $9000 for every employee.  What this means is that usually only the first $7000 of wages paid to each employee is subject to TN unemployment insurance.  For a company at the default rate of 2.7% this works out to $189.00 per year per employee.  If the employee was paid more than $7000 in the first quarter only the 1^st $7000 was “taxed” and the overage was exempt from the 2.7% insurance/tax rate.

Now, every employee’s wage base will increase to $9000.  Any previously exempt amounts will now become a part of your new rate (or in other words your normal rate + .6%).  So if your default rate was 2.7% it is now 2.7%+.6% on the whole $9000 which equates to $297 per employee.  This effectively is a  57% insurance rate increase.  If you have 10 employees the additional cost is $1080 per year, ouch!

With all of this being said, if we handle your payroll feel rest assured that it will be calculated going forward correctly.  You will still receive a bill from the TN Dept of Labor for the first qtr rate increase.  When you receive the notice, you should fax us a copy and then unfortunately cut a check to the addressed envelope included.

If we handle the payment and filing of your payroll taxes and payroll filings you will be receiving a notice from us of the uncollected state unemployment to date.   We will let you know when we will be collecting the additional previously uncollected liability in order to timely remit it to the TN Department of Labor. 

 

If all of this makes your head swim....feel rest assured it does ours too....but we have it all figured out.....

In the mean time please feel free to contact us if you are still confused or are now more confused than ever.

 

Also here is a link to the notice as provided by the TN Dept of Labor http://www.tennessee.gov/labor-wfd/Employers/2009_UI_LegislationLetter.pdf