You need to also include unemployment aswell in your list. I work in IT as well as having my own business and there is a way to get around paying all of the fees expecially if the person you are hiring is young, just getting started and doesn't have a family. You can use the person as a contractor vs hiring him as a full time employee, the only draw back is that he would not have insurance through your company.
The IT projects that I am trying to get have a requirement that the people who work from my side be my employees and not contractors (My contract with the customer requires that the work is not sub-contracted).
Do you have any idea on the % of each of the components that I mentioned above?
Also, how does the group health plans work? I mean in terms of payment of employee and employer contribution towards the cost of the benefit to the employee.
Hello again The_USA_Champ
I just saw your reply to the other contributor. So, you have a contract on the table that REQUIRES you to have company owned employees.
You should know that when a client puts requirements on a company that they want to hire, of course they mean business, and in your industry this could also mean that you may have a certain level of access to internal data while performing that service. What does this mean? It means whoever you are hiring, you need to be able to trust 100%....I'll say that again WHOEVER YOU ARE HIRING, YOU NEED TO BE ABLE TO TRUST 100%. If data is compromised you CAN, AND WILL BE SUED to the MAXIMUM extent that the law allows them.
Get company insurance to protect yourself, along with your employee.
Get a lawyer to look over the contract to protect yourself, along with your employee.
Get a signed contract between you and your employee(s) that clearly defines the ground terms for working for your company (leave extreme legal jargon off of this). In your field this should also be used to let your employees know that you mean business.
Get a background check done on your future employee to protect yourself and your client(s). Depending on the client, that background check should include a criminal, credit, and work history report. It is none of your clients business what is in those reports, but it is a record and determining factor as to who you have working for you.
Again, good luck to you, and good job on getting a contract on the table.
I believe you can contact your State's Department of Revenue and the IRS which can give you proper direction. I think both of these can send you the information on getting a state employer ID and a federal. They also have booklets you can get that will help you figure out those percentages. You may be able to get them locally too.
I had a post up here for you with the numbers but for some reason it wasn't approved. So, I'll make this one fast. Your question is simple and complex all at the same time. You would want to go to the correct government agencies to check the numbers I give you, as I am not a payroll specialist myself lol.
Federal Tax - around 7%, 6.94421 is very close
Social Security - 6.2%
Medicare - 1.45%
State Tax - If it applies, what state?
FUTA (Federal Unemployment Tax) - 6.2% or (the first $7,700)
Workers Comp. Insurance - You would need to ask a broker
SUTA (State Unemployment Tax) - If it applies, what state?
You are responsible for matching SS and Medicare. You are also responsible for paying your own Fed Tax, State, FUTA, SUTA, and Workers Comp. These are your responsibility and cannot be passed on to your employees as that is against the law.
A 401k has many variables that would tell you what you are charged. Will you offer matching 401k?, if so, will you have a limit on what you will match per year? ect.
Healthcare, Life, Retirement, including 401k, depends on you as an employer and the "benefits package that you would like to offer your work staff. A lot of times, these packages can make or break small companies, sometimes literally, be careful lol.
Like I said, go to a local agency and check these numbers, along with others that you may need. I am not a payroll specialist at all, but this should give you a good idea.
Here is a very helpful website that you can defiantly use now: http://www.payroll-taxes.com/calculators.htm
Payroll is very easy and inexpensive these days. You can outsource it for like 30 bucks a month and they will calculate everything for you and make the payments to both Federal and State governments. This also include the tax Forms 941 and 940 which are filed quarterly to the IRS. They can also take care of the state tax filing requirements. I use QuickBooks online payroll to handle my clients and they are very good. Currently I take care of it for clients using QB and just mark it up slightly. Here is some helpful info for you. http://www.lawrencetaxconsulting.com
There are a lot of hris programs and payroll software available out there that will populate all of these things for you. I know many people use QuickBoooks and other online money management systems, but there is software that is specific to payroll available too. It will be an investment that is worth it and will save you time and money. It will be a lot easier for you tax accountant at the end of the year too. I would just google, "payroll software" and see what you can find. Good luck!
If I offer a gross salary of $1,000.00 to an employee, what components do I have to factor in? Some that I can think of are:
1. Employer Contribution to Social Security
2. Employer Contribution to Medicare
3. Employer Contribution to Federal Unemployment tax
4. Employer Contribution to Health Insurance Plan (Is this required by law? Or is it offered as a benefit at will by the an employer)
5. Employer Contribution to 401K (Again, Is this required by law? Or is it offered as a benefit at will by the an employer)
I would appreciate if someone can give me exact percentages of each of the components. Also, please point out if I have missed out any components.
Any pointers on how to handle payroll and submitting the withheld tax + employer contributions to relevant government agencies?
Thanks in advance for looking up my question.