Question 1

What is the difference between a W-2 employee and a 1099 contractor?

Accepted Answer

A W-2 employee works under your direction and control, and you withhold and pay payroll taxes for them. A 1099 independent contractor controls how the work is done and handles their own taxes. The IRS looks at behavioral control, financial control and the relationship of the parties.

Question 2

Which federal payroll tax forms do employers file?

Accepted Answer

Most employers file Form 941 quarterly to report withheld income tax, Social Security and Medicare, and Form 940 annually for federal unemployment (FUTA). At year end you issue W-2s to employees and file them with the Social Security Administration.

Question 3

How is overtime calculated for non-exempt employees?

Accepted Answer

Under the federal Fair Labor Standards Act, non-exempt employees earn at least 1.5 times their regular rate for hours worked over 40 in a workweek. The regular rate must include most non-discretionary bonuses and, for multiple pay rates, is usually a weighted average.

Question 4

Can I require employees to use direct deposit?

Accepted Answer

It depends on your state. Federal law allows direct deposit, but many states limit whether an employer can make it mandatory or require offering another payment option. Pay stub content rules also vary by state.

Question 5

How are workers' comp premiums calculated?

Accepted Answer

Premiums are generally based on payroll per $100, multiplied by the rate for each job's class code, then adjusted by your experience modification rate (EMR) and any other credits or debits.

Question 6

What is pay-as-you-go workers' comp?

Accepted Answer

Pay-as-you-go ties your premium to actual payroll each pay period instead of an annual estimate. Because payments track real wages, it can reduce large upfront deposits and big year-end audit adjustments.

Question 7

Is workers' comp required in my state?

Accepted Answer

Nearly every state requires employers to carry workers' compensation once they have employees, but the thresholds, exemptions and penalties differ by state.

Question 8

What happens in a workers' comp audit?

Accepted Answer

After a policy term ends, the carrier reviews your actual payroll and job classifications to compare them with the estimate used to price your policy. You may owe more or receive a refund.

Question 9

What can I do if I'm declined for workers' comp coverage?

Accepted Answer

A decline from one insurer usually isn't the end. Most states run a residual market (often called the assigned risk plan) or a state fund that must offer coverage to eligible employers who can't find it in the regular market. You can also ask other carriers, or look at a PEO or pay-as-you-go program.

Question 10

Why did my workers' comp premium go up at renewal?

Accepted Answer

Renewal increases usually come from a few places: higher estimated payroll, a change in job classification, a higher experience modification factor (from past claims), or updated rates filed in your state. Your last audit can also reset the payroll used to price the new term.

Question 11

What is a PEO, and how is it different from a payroll service?

Accepted Answer

A Professional Employer Organization (PEO) enters a co-employment relationship with your business, handling payroll, tax filing, benefits and often workers' comp under its own programs. A standalone payroll service runs payroll for you while you stay the sole employer.

Question 12

How do PEO fees work, and how do I compare them?

Accepted Answer

PEOs usually charge either a flat fee per employee per month or a percentage of total payroll. Benefits, workers' comp and payroll taxes may be bundled into one invoice, which makes quotes hard to compare side by side.

Question 13

What workplace posters are employers required to display?

Accepted Answer

Federal law requires certain notices, such as minimum wage (FLSA), job safety (OSHA) and equal employment opportunity, depending on your size and industry. States add their own required postings.

Question 14

When is a final paycheck due after an employee leaves?

Accepted Answer

Federal law does not require immediate final pay, but many states do. Some require payment on the last day, others by the next regular payday, and rules often differ between termination and resignation.

Question 15

Does my small business need an employee handbook?

Accepted Answer

It's usually not required by law, but a written handbook sets clear expectations on pay, time off, conduct and complaints, and documents that required policies were communicated.

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