These days, of course, the whole process takes place on-line, so there's no chance of losing the little coupon in the mail or dropping it on the way to the bank. It's so much easier to make the monthly deposit deadlines this way, too. (You kids today don't know how good you have things.) So now at the end of every month I add up the various amounts that were withheld from each employee's pay, log on to two web-sites, and the money gets sent straight from the company's bank account - we don't even have to write checks any more.
Then at the end of each quarter, there are forms that reconcile the amounts that we DID withhold against the amounts that we SHOULD have withheld. Now, most of the time these amounts are the same, assuming I did everything right - but just in case there was a slight mistake made, there's this opportunity to correct it every three months. For the Feds, this means filling out form 941, and for NY State, it's form NYS-45. Both essentially serve the same function, to reconcile and double-check the last three months of withholding, and make sure everything adds up right. But on this state form, we also calculate the New York State unemployment due for each quarter, which is based on a small percentage of every employee's pay, or the first $10,900 of it at least.
(Federal unemployment tax, or FUTA, works a little differently. Each company owes a small percentage of the first $7,000 each employee makes during the year, and you can deposit this quarterly, or at the end of the year with Form 940 if your company doesn't have a large payroll. I prefer to do this every quarter so ideally, there will be nothing due at the end of December.)
Beyond the taxes and contributions withheld from each paycheck, and then the state unemployment and the federal unemployment, the next items that the employers have to be responsible for are worker's compensation and disability. I mentioned these above, and these are in case anyone gets injured while working, or on the way to or from work, and again, you hope that nobody ever needs to file a claim against them, but the company still needs to have the policies, just in case.
Staying on top of these policies is a constant battle - it seems one of them is always sending a bill for an installment that has to be paid, or at the end of each policy year there's some kind of audit procedure for verifying the actual (not estimated) payroll during that year. And just the other day we got a notice in the mail asking for both an audit AND a payment on one of the policies, but there was no bill showing the correct amount to pay. So I called their customer service line, and I was told there was a balance due, and they would e-mail me the audit statement to fill out, and that would determine the billing amount.
That's all fine, but when they sent me the audit form, it was for the previous year, and I had already filled that exact form out and sent it in over 12 months ago with a payment. (This is why it's always good to keep a scanned copy of every filled-out form on your computer.) The customer service rep asked me for the check number of the payment, then confirmed the payment was made, and that there really WASN'T a balance due on the account, that the letter had been sent in error. But since it had been more than 12 months since that payment, I asked "Shouldn't there have been a new payment due in October, which was last month?" Yes, but in fact they didn't send out the new bills when they should have, because they're making some kind of adjustment related to the Family Leave Act. So this year's disability policy payment is now two months late, but it's not our fault, since the insurance company can't seem to get their act together and send out audit statements on time. Instead they (apparently) decided to bill us again for the year ending October 1, 2016, even though we already filled out that audit form, paid the balance and have the cancelled check to prove it.
Now, for these three new employees in the studio, working on various aspects of the production of "My Love Affair With Marriage", I've been handing out those W-4 forms which help me calculate each person's withholding, and also the I-9 forms, which are the ones that verify each employee's identity and prove that they are legal to work. It just so happens that all three new employees are resident aliens (the kind that come from another country, not another planet, come on now....) so this is another part of employing people that is often very confusing. If they have foreign passports, are they allowed to work in this country, and what do we do if they don't have a Social Security Number?
Thankfully, technology has now made this part of the process much simpler as well. We found out that the U.S. Census and Immigration Services has now put this whole process online, with a service called eVerify. Back in the day, I guess you would just sort of photocopy someone's documents and put them to work, and cross your fingers in the hope that you weren't breaking any laws - but now I can sign on to this eVerify web-site, type in their document IDs and in just a few minutes, I get an on-screen confirmation that this person is cleared to legally work in the U.S. - so no more guesswork is involved, and that's great.
We're getting close to the end of the year, and that means I'll have to generate W-2 forms for myself and the other employees - if you've never been employed, these are forms that break down exactly how much each employee earned during the calendar year, and also has totals for how much money was withheld for each federal and state tax or contribution item. This way when each employee files their tax returns next year, this document shows how much money has already been put aside to pay their federal or state tax. If everything was done correctly, then they shouldn't owe very much tax or get too big of a refund - either of those results could mean that the right amount wasn't withheld, either too little or too much.
Essentially, what all of this withholding is designed to do is allow people to pay their taxes in advance, if they want to. Let's say I withhold $300 from the year for federal tax for an employee, then when they do their tax return in April and they find out they owe $300 in tax, it's already taken care of. That's how it's supposed to work in theory, but it almost never works exactly right, the odds against this are staggering. To get this right, you'd need to have a crystal ball to know all your deductions, somehow be able to calculate what you owe 12 months in advance, and then be incredibly lucky on top of that. So nobody ever, ever hits this right on the nose, they either withhold too much and get a refund or withhold too little and have to make up the difference. But if your situation is somewhat stable from year to year, you can tweak this process, little by little, to get pretty close.
Then there's the matter of personal preference, some people would rather have a little bit more taken out from their check each pay period to guarantee they get a refund, while other people would rather have more of their money now, and risk having to pay money with their return in April. Over time it all tends to even out, but that's the beauty of accounting, its debits and credits, checks and balances. I've come to appreciate it as something of an art form, especially in those cases when all the numbers line up and there's nothing owed and nothing due back. On those days, math starts to look a little like something magical.