Charles Read - The Payroll Book: A Guide for Small Businesses and Startups

Charles J. Read, CPA

2020 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data.

Names: Read, Charles, author.

Title: The payroll book : a guide for small businesses and start ups / Charles Read.

Description: First Edition. | Hoboken : Wiley, 2020. | Includes index.

Identifiers: LCCN 2020021876 (print) | LCCN 2020021877 (ebook) | ISBN 9781119704430 (paperback) | ISBN 9781119704539 (adobe pdf) | ISBN 9781119704515 (epub)

Subjects: LCSH: WagesAccounting. | Small businessAccounting. | Bookkeeping.

Classification: LCC HF5681.W3 R43 2020 (print) | LCC HF5681.W3 (ebook)| DDC 658.3/21dc23

LC record available at https://lccn.loc.gov/2020021876

LC ebook record available at https://lccn.loc.gov/2020021877

Cover Design: Wiley

Cover Image: Courtesy of Charles J. Read

The Payroll Book is the summation of 40-plus years of payroll experience, mostly with small businesses. From my first job as a controller to becoming a business owner to owning a national payroll service bureau, I have processed tens of thousands of payrolls for thousands of companies over the years. I have the professional qualifications to go with that experience, including being a certified public accountant (CPA) for over 40 years. I am also a United States Tax Court Practitioner, which allows me to represent clients in the US Tax Court without being an attorney. As a member of the Internal Revenue Service Advisory Council, I meet with the IRS to help provide recommendations for tax problems or concerns.

All of the information presented in this book is general in nature and you should consult with your trusted advisors on specific situations in your business.

Payroll is vital to the federal government's tax operations. Over 70% of the revenue collected by the IRS comes through payroll departments, either as withholding or payroll taxes.

In addition, the IRS issues over $6 billion a year in employment tax penalties on businesses large and small. Forty percent (40%) of small businesses are penalized every year, with the average penalty approaching $500. However, more than half the penalties get abated; I will show you how in .

Payroll is an integral part of your business. Do it wrong and it can cost you everything. There are lots of complexities in preparing payroll that I will walk you through. I'll also try to keep you out of trouble with the taxing authorities and keep your employees happy as well.

First of all, this book is designed for the small or new business. By small I mean those with 50 or fewer employees. I am not going to assume that you have a dedicated human resources department, a payroll department, or employees on staff who are specialists.

Everything here applies to larger businesses as well but a large business has additional problems and regulations that are not important to the small business owner. I include a section in the back () that discusses the additional laws and regulations you will be subject to as you hit employee count milestones.

This book is broken into three parts.

covers the details in setting up a payroll. Some of this material you will never need in your business and some will be absolutely critical. It is a truism in the payroll business that if a payroll client is set up correctly, it runs like clockwork forever. If the client is set up poorly, it is a disaster, and the client soon leaves.

will help you to get a payroll done and out the door.

offers a lot of additional essential components in the payroll arena. Some, such as record retention, you need to know in order to keep yourself out of hot water; next year or five years from now. Other items may or may not be important, depending on your business and how it and you operate.

In addition to this book there are some extra resources that you may find useful. There are also links to reference pages some of them lead to our website, some to various governmental sites, and others to sites of third parties. They are subject to change and some handle lengthy technical areas, making it difficult to cover in a book. We keep the information in our links up to date and they are available to anyone who reads this book.

String on Finger Icon: These will be important points that you need to remember as you move forward.

Light Bulb Icon: These are tips on doing payroll that will make your life easier. Many of these tips are the result of seeing mistakes and problems over the years and finding ways to avoid them the next time around.