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Workers Compensation Law Discussion


Postby Honovi » Thu Mar 26, 2015 6:32 pm

Hello. My question is pertaining to payroll calculations.

I'm going to start working for my father and I will be the only employee on payroll.  I have never done payroll calculations and am starting to get overwhelmed.

We have gotten an employer number from the TN Dept of Labor and I have received a notice showing my U.I. Premium Rate.  I have no idea what that means.  I can't seem to get a straight answer(that I can understand) from them or the IRS and I don't want to mess us up.  I know I can follow the chart in Publication 15 but that only pertains to part of it.  

I'm not comfortable at all having to calculate these figures and I will be responsible for the calculations on both ends(mine and the employer). I'm assuming this means the federal taxes as well as unemployment and I don't even know where to begin. :(
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Postby Queran » Tue Mar 31, 2015 6:20 am

It is not so hard to do payroll calculations and yes it can be overwhelming at first. With only 1 employee you should do okay.

If you have a computer system with a payroll program that is good. If not it is okay too. If you have a computer with Excel that will work. If you can purchase software I would suggest quick books to get started on for the business. It is inexpensive and fairly simple to use.

If not get an accounting book with the lined accouting paper.

Federal taxes are reported to the government every time you do payroll.

You calculate the federal tax on your gross wages from the charts in Publication 15

Fica tax you take your gross pay and for the employee amount you withhold 4.2% and for the employer amount you withhold 6.2%. For medicare it is 1.45 % and matched by the employer.

Both these amounts are paid in to the government when you do payroll through the EFTPS system. You will need to go in and set up an account. You need your EIN number to set up an account.


You send both the federal and the fica employer and employee in through EFTPS.

State withholding taxes is sent in once a month to the State of Tennessee.

UI is unemployment tax it is called SUTA(State Unemployment Tax) and you will also pay FUTA(Federal unemployment tax) You pay the SUTA tax monthly to the state of Tennessee and you pay the FUTA tax quarterly through EFTPS.  Suta is the rate you have been given and Futa is .008 of your wages.

You do quarterly reports for Fica and Federal withholding which are called 941 reports

You do an annual report for FUTA which is a 940 report

You do a monthly report for State withholding At the end of the year you will do a W-2 which must match the amounts on the filed reports. I use Excel spreadsheets to reconcile these reports.

You can take a payroll course from the American payroll Association to help with basic payroll.  They also publish a book called the payroll source which would help you out a great deal. http://www.americanpayroll.org/

I would suggest their online "fundamentals of payroll" learning classhttp://www.learnpayroll.com/info/FOP_Learning_Options.html

I wish I could upload a copy of spreadsheets but I cannot upload here

Your spreadsheet would look like this if you are doing payroll by hand

Employee Name     Gross Pay   Fed Tax    Fica Tax  Medicare Tax  State Tax     Net Pay

Jane Doe          300.00      24.00      12.60     4.35          24.60         234.45

To pay the taxes you would pay on the 941 through EFTPS 24.00 Federal          12.60 Fica Employee          300.00X 6.2%          18.60 Fica Employer          4.35 Medicare employee          4.35 Medicare Employer          -------------------          Total 941 Payment          63.90

The state tax would be the 24.60 sent to the State of Tennessee

Futa tax is paid quarterly but the Futa tax due on this is 300.00 X .008 = 2.40

Suta tax is paid quarterly but the Suta tax due on this is 300.00 X your Suta rate

If you do not pay Suta on time the federal rate for Futa will go up to 6.2% Futa is paid on the first 7000.00 of your wages than it stops

Suta is paid on your state's limit which for Tennessee it is also 7000.00 than it stops

The other consideration you may have is purchasing worker's compensation insurance from an insurance company and possibly liability insurance. You just need to call an insurance agent for that.

If you need further help please email me at [email protected] and I can help you with specific payroll processing. Shirley  
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