Payroll Services FAQ

Pay Types: Hourly/Salary/Contractors

Q: Can I pay my employees a flat weekly salary instead of regular hours and overtime hours?

A: The Department of Labor has clear-cut rules governing overtime pay. Unless an employee is exempt, the employee is entitled to overtime pay at a rate of 1½ times their regular pay rate. Generally, overtime is defined as anything over 40 hours within a 7-day period but this definition can vary by state.

You can still pay your employees a weekly salary, but if the employees don’t meet the Department of Labor’s standards of an exempt employee you will still need to track their hours and pay overtime after 40 hours. Another thing to consider, if an employee is paid a salary you must pay the employee for the entire day if any hours were worked during the scheduled day. You can only deduct if the employee did not work the entire day.

Q: How do I determine whether to pay my workers as employees or subcontractors?

A: That is a very complex question. Each government agency (IRS, Dept. of Labor, Div. of Workers Compensation, etc.) has a set of approximately 20 rules to determine a persons’ status. The problem is that each of the agencies has a different set of rules – so you can legally have subcontractors according to one government agency and not according to another. If you are unsure, it is always safer to make the worker an employee.

Employers must generally withhold federal income taxes, withhold and pay social security and Medicare taxes, and pay unemployment taxes on wages paid to an employee. Employers do not generally have to withhold or pay any federal taxes on payments to independent contractors.

Q: What really goes on a 1099 Misc.?

A: Much like understanding how to classify your employees, understanding what should be entered on the 1099 MISC (often shows expenses related to non-employee labor) is just as important. Classification errors on the 1099 can draw unwanted attention from the state employment department. To avoid error, contact your state government for a full explanation of employee classification laws and the rules encompassing their pay.

Direct Deposit

Q: Do you offer direct deposit?

A: Yes, we do! Over 93% of employees nationwide currently participate in direct deposit. While employees appreciate direct deposit’s security and convenience, it can also make your payday more economical and productive.

We have the functionality to process your payroll check into your account via EFT (electronic funds transfer) through your established bank. We can also process your paychecks into multiple accounts if you desire as long as we have the appropriate account information. You will need to allow at least one payroll cycle for direct deposit to be active.

Withholding Taxes

Q: Will you automatically withhold the appropriate taxes from payroll checks?

A: Yes, IPM Payroll Solutions automatically calculates all payroll taxes for you, and completes your payroll tax forms.

Federal paycheck taxes include federal income tax, Social Security and Medicare. State paycheck taxes include income taxes in most states, and other taxes that vary by state.

In addition to these payroll taxes and forms, IPM Payroll Solutions calculates federal and state unemployment insurance on all paychecks. These are taxes that start at the beginning of the year and continue until a dollar threshold is reached for each employee.

Garnishments

Q: Do you take out appropriate garnishments?

A: Yes. Although withholding and remitting employee garnishment payments can be difficult, we can take this burden off of your shoulders. This wage garnishment service withholds and remits payments to assist you, and includes the following:

• Remittance of garnishment deductions to the corresponding agency.

• Electronic transfer of funds where accepted or required.

• Garnishment specialists to assist with individual issues.

Pay Periods

Q: What is the difference between bi-weekly and semi-monthly payroll?

A: Biweekly payroll involves paydays that occur 26 times per year, such as every other Friday.

Semimonthly payroll refers to paydays that occur 24 times per year, such as paydays that occur on the 15th day and the last day of every month.