Words Small Business Owners Don’t Want to Hear: Pay Back Wages
One thing a small business owner never wants to hear in connection with his payroll is BACK PAY. Don’t be confused, Back Pay is not when you give an employee a raise and make the start date in the past and allow for retroactive pay. No, Back Pay is a remedy for wage violations. It’s an order that the employer make up the difference between what the employee was paid and what the employee should have been paid. It’s a serious situation. (more…)
Generally, your employee’s tips are not taxable unless they make more than $20 per calendar month. If they do make over $20 in tips per month, you’re responsible for withholding income and FICA (Social Security and Medicare) taxes on the employee’s reported tips (all tips, including the initial $20) – even though you don’t have control over the amount of tips your employee receives.
As with many business decisions, a good place to start is by looking at the applicable state and federal law. In this case, there are not a lot of rules that must be followed. Federal and state laws do require that employees be paid on a regular basis. That means that you need to decide how often employees will be paid and then stick to it. A business is not allowed to deviate from its usual pattern to accommodate a seasonal slump or an unexpected expense. In addition, some states have laws setting a minimum frequency at which workers must be paid.