Circular E, Business and OSHA Shortcuts Circular E

1. From page 3 Employers subject to income tax withholdings, Social Security taxes, or both must file form 941, Employer s Quarterly Federal Tax Return. Due dates for Returns and Tax payments Ending Due Date March March 31 April 30 June June 30 July 31 Sept September 30 October 31 Dec December 31 January 31 7. 2. From pages 21,22 Methods of deposits 1. 2. Electronic Federal Tax Payment System(EFTPS) Federal Tax Deposit (FTD) coupons.(Form 8109) 6. From page 23

Quarter Jan,--Feb. Apr,-- May July Aug. Oct. Nov.

If more than $100,000.00 or more in taxes is accumulated in any one day during a deposit period taxes must be deposited by the close of the NEXT banking day (this applies to both a monthly or semiweekly depositor). A monthly depositor that accumulates $100,000.00 or more in taxes in any day becomes a semiweekly depositor for the remainder of the calendar year. For semiweekly depositors see due days,

From page 25 TO MAKE TIMELY DEPOSITS PENALTIES 1. 1-5 days late: 2% of the undopsited taxes. 2. 6-15 days late: 5% of the undopsited taxes. 3. 16 or more days: 10% of the undopsited taxes. The penalty applies also to paid amounts to the IRS within 10 days of the date of the first notice sent by the IRS in request of due taxes. 4. Electronic Federal Tax Payment System(EFTPS).10% of any amounts subject to EFTPS requirements and not deposited using the EFTPS 5. 15% For unpaid taxes more than 10 days after the first delinquency notice or not paid on the day of given notice for the immediate payment. 8. From page 5 All tax records of employment are to be maintained for minimum of 4 years. 9. From page 3 Every employer must verify each new employee legally eligible to work in U.S.A. , by completing form I-9 on every employee and report every new hire to the registry. 10. From page 15 Every employee must fill out form W-4 Withholding allowance, withhold taxes from the employee wages are according allowances on the W-4. If a new employee does not fill out form W-4 then with hold as he/she is no withholding allowances. From page 16: The W-4 form stays in effect until the employee submit a new W-4 form.

The deposit Schedule is based on the tax liability reported on the form941 during the lookback period that begins on July 1 and ends June31. 3. From pages 21,22 If the total tax reported on form 941 is less than $50,000.00 for the four quarters in lookback period, you are a monthly depositor for the current year. Deposit must be made for Employment taxes and taxes withheld on th payments made during a calendar month by the 15 day of the following month and you would be a monthly depositor for the year in which you first become an employer. 4. From page 22 If the total tax reported on form 941 is more than $50,000.00 for the four quarters in lookback period, you are a semiweekly depositor for the current year. Semi weekly depositors must make deposits on Wednesday and/or Friday depending on what day of the week payments are made, see table. Semiweekly depositors have 3 banking days after the end of a semi weekly period to make a deposit. See table below. Semiweekly Depositor Due Day Payment Days Deposit By Wednesday, Thursday, and/or Following Wednesday Friday Saturday, Sunday, Monday, Following Friday And/or Tuesday

5.

from page 8 Employer Identification Number (EIN). Every employer must have an EIN, EIN is obtained be submitting form SS-4 to the IRS or Social Security administration. Application may be done by phone or internet with the IRS. 11.

From page 4

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Circular E, Business and OSHA Shortcuts

All payments of $600.00 or more to any person not treated as an employee to be reported on form 1099. (such as an independent sub contractor) 12. from page 18 Social Security tax rate for both employer and employee is 6.2% for an annual wage base $106,00.00 0R LESS(Therefore the maximum amount of Social Security tax that can be withheld is .062 x $106,00.00 = $6,621.60). the employer must match Social Security withholdings 13. from page 18 Medicare tax rate for both employer and employee is 1.45% there is no annual wage base for Medicare. 14. From pages 41-60 Federal tax withholdings are found in the wage brackets tables 15. From pages 37-40 Federal tax withholdings Percent method (primarily used when figuring federal tax withholdings)

Income Tax Withholding

Percentage Method

If you cannot use the wage bracket tables because.wages exceed the amount shown in the last bracket of the 6 table, use the percentage method of withholding described below.

Payroll Period weekly Biweekly Semimonthly Monthly Quarterly Semiannually annually Daily or miscellaneous

One with withholding allowance $70.19 $140.38 $152.08 $ 304.17$ $912.50 $1825.25 $3650.00 $14.04

Example of percent method An un married employee is paid $600.00 weekly. The employees W-4 shows 2 withholding allowances. Total wage $600.00 One Allowance $70.19 Allowances Claimed on 2 W-4 Multiply line2 by line 3 $140.38 Subtract line 4 from line 1 $459.62 Go to percent method table for single person (table 1) $47.34 Soc. Sec. tax 600 x .062 $37.20 Medicare tax 600 x.0145 $8.70 Subtract line lines 6, 7 $506.76 and 8 from line 1 Net pay $506.76

Wage Bracket Method Figuring Withholding tax based on Circular E

Wage bracket method, find the proper table (on pages 3857) for your payroll period and the employee's marital status as shown on his or her Form W-4. Then, based on the number of withholding allowances claimed on the Form W-4 and the amount of wages, find the amount of federal tax to withhold. If your employee is claiming more than 10 withholding allowances, see below.If you cannot use the wage bracket tables because wages exceed the amount shown in the last bracket of the table, use the percentage method of withholding described below. Be sure to reduce wages by the amount of total withholding allowances in Table 5 on this page before using the percentage method tables (pages 3637).

1 2 3 4 5 6

An employee is paid $13.00 an hour. On the W-4 claims single with 2 exemptions , and gets paid Bi - weekly Gross pay = $13.00hr. x 80hrs. = $1040.00 Soc. Sec. tax = $1040 x .062 = $64.88 Medicare tax = $1040 x.0145 = $15.08 Fed. Withholding*** = $69.00 Net (take home) pay = $891.00 ***Use the table Single persons-Biweekly the wages of $1040 fall into the column of at least $1020.00 but not more than $1040.00 look under the column for 2 dependants and the allowance is $69.00.(this is the federal withholding allowance) the employees net pay(take home) would be $891.00

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Circular E, Business and OSHA Shortcuts

Business Management
There is more to operating and running a business than just having the skills to perform the work. The construction industries is among the top of business failures in the U.S.(approximately 20%), Due to the high failure rate of contracting businesses, the state requires an applicant to be familiar with the rules of the game . There are approximately 800,000 contractors, and approximately 77% are individual proprietorships (sole proprietorships), 17% are corporations and 6% Partnerships. 50% of these companies do less than $300,000.00 a year, and approximately 10% account for 80% of the construction volume. A majority of these are small businesses. Construction in the United State is approximately $200+ billion annually and employs over 6 million with approximately 4 million full time employees, which is about 16% of the U.S. employment. Record keeping is required and cash flow is crucial, these are the areas in which most businesses fail. General George S. Patton said: "A good plan violently executed today is far and away better than a perfect plan tomorrow." Types of Businesses

C Corporation: must comply with the formal requirements of

state law .the stockholders are the owners and have no personal liability can own assets, business continues in the event of a death of a share holder.
Disadvantages Complex and expensive organization Limitation on corporate activities and decisions by the corpate charte Extensive regulations and record keeping Double taxation(corporate and on dividend) Advantages

Unlimited life of the business Separate legal entinty Limited liability of stockholders Transfer of owner ship through sale of stock Available capital

S Corporation: must comply with the formal requirements of

state law .the stockholders are the owners and have no personal liability,the business can own assets, business continues in the event of a death of a share holder. Aviod double taxation Only one class of stock, not more thane 75 shareholders, all shareholders must consent to s corp.

Sole proprietorships:
Disadvantages

the Individual is the sole owner of the company

Advantages

Unlimited personal legal liabilities Business is dissolved in the event of death Difficulty in obtaining financing

Freedom of decision making Low start up cost

Limited Liability(LLC): Has characteristics of a

proprietorship and a corporation.
Disadvantages

sole

Advantages

Less available capital

Minimum legal Restriction(simplest form of business) Owner get all profits

Expensive organization

Limited disclosure of the business Separate legal entinty Limited liability of managers and members No public disclosures of finances Ability to delegate management to non members

Extensive regulations and record keeping

Partnership: two or more persons who share in the

contributions of property, labor, and money ,ect.
Disadvantages Unlimited personal legal liabilities of all owners Business is dissolved in the event of death Limited life of business Difficulty in decision making(adding/removing partners) Less available capital Advantages Taxation(LLC is not taxed on an entity level)

decision making spread among owners(management) start up is typically easy

Minimum legal Restriction(simplest form of business) Owners get profits

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