Many companies use payroll software or a payroll service to issue checks based on a set pay period. Occasionally, the need to write a manual check arises – like paying an employee a special bonus or as a gift for a job well done. These off-cycle manual checks may trigger time-sensitive tasks for your accountant or payroll provider; notifying them prior to, or immediately after, is recommended.
Your accountant or payroll person will be able to clarify:
- What taxes may apply to the manual check.
What dollar amount is needed to account for the employee’s tax bracket.
- For example: You give an employee a $1,000 manual check for a job well done, but the employee’s tax bracket is 25 percent. Your accountant will advise if you need to increase the check to $1,333.25 in order to cover the employee’s tax burden.
- What impact the manual check has if the employee typically receives a direct deposit.
- What adjustments are needed to the overall company payroll taxes.
- What impact the manual check has on state and federal tax deadline
Paying company taxes on time avoids potential penalties and late fees that range from 2% to 15%.
Deadlines vary based on the receiving agency and amount of taxes you report. For an example, see “Federal Payroll Tax Deadlines” below.
Since each company is different, your accountant or payroll person may have more questions. Accordingly, keeping them in the loop will permit you to confidently issue an occasional manual paycheck; knowing you are better positioned to avoid potential pitfalls. If you have questions about your company’s tax deadlines or have other financial needs, please contact us at your convenience.
Federal Payroll Tax Deadlines
There are two types of Federal deposits made to the IRS: monthly schedule deposits and semiweekly schedule deposits. The schedule appropriate for your company depends on how many taxes you report, therefore determining when you schedule your deposits. If you report taxes of $50,000.00 or less, your monthly deposit is due on or before the 15th of the following month. If the 15th of a calendar month falls on a Saturday, Sunday, or legal holiday, the deposit is due by the next business day. If you report taxes of more than $50,000.00, you make semiweekly schedule deposits based on the following schedule:
- If your payday is on a Wednesday, Thursday, and/or Friday, you must deposit these taxes by the following Wednesday.
- If your payday is on a Saturday, Sunday, Monday, and/or Tuesday, you must deposit these taxes by the following Friday.