This week we will go into greater detail on some of the laws and rules you need to be aware of before you become an employer. As we noted last week, the Department of Labor and the State of Wisconsin have websites with all the information you need as an employer.
Some things to look for on these websites: The information you need to maintain in employment files for each of your employees, the posters you need to have displayed somewhere in your business, the rules about unemployment insurance (both state and federal) and the rules for filing and paying payroll taxes.
A key piece of information regarding payroll taxes: The Federal Government takes payroll taxes very seriously and failure to remit taxes withheld from employee paychecks is considered theft. Falling behind on remiting payroll taxes has severe consequences. Paying 1-5 days late can result in a 2% penalty, 6-15 days late brings a 5% penalty and 16+ days means 10% penalty. Depending on the amount the business was to remit, this can be a significant amount of money. The government can also proceed with civil proceedings such as filing liens against your property until the taxes are paid in full and criminal proceeding can and do occur and can result in imprisonment.
The Federal Government is also allowed to go after personal assets if a business fails to remit payroll taxes even if the business is an LLC. This is how seriously they take payroll taxes!
Again, the message to take away from this article is to do your homework before you become an employer. There are many different payroll tax providers who will assist in setting up your payroll process or teaching you to maintain the system. Unless you have experience with payroll, it is advisable to use one these experts to get you off on the right foot as an employer.