Ever wonder why a lot of businesses pay their employees under the table?

theclemsonkid

theclemsonkid

Member

Wanna know why a lot of businesses pay their employees under the table? Here's a wonderful real world example! Thanks to new payroll tax increases, I have one employee, and it just went from $372.93 per two week pay period to $557.47 that I pay as the employer. That's a little over $14,400 a year in taxes. And that's not even including the 25% or so that already comes out of my employees check before she even gets it. Think we don't have a tax problem in this country?!?
I think it needs to be tiered in some way, based on earnings or something... Look, I don't feel bad when Exxon has to pay these taxes, because they have billions of cash laying around. However, when it comes to the tens of thousands of small businesses in this country (just like mine), who make less than $50,000 per year, a $14,400 tax per employee out of my pocket hurts, a lot. I honestly would love to hire another person to work here, but at that rate, there is no way it would be financially possible. When people ask me why I work 60 hours a week... I always joke that I just love being here! The truth it, I couldn't afford to hire anyone else even if I wanted to!
 
reefraff

reefraff

Active Member
Quote:
Originally Posted by TheClemsonKid http:///t/394350/ever-wonder-why-a-lot-of-businesses-pay-their-employees-under-the-table#post_3509923

Wanna know why a lot of businesses pay their employees under the table? Here's a wonderful real world example! Thanks to new payroll tax increases, I have one employee, and it just went from $372.93 per two week pay period to $557.47 that I pay as the employer. That's a little over $14,400 a year in taxes. And that's not even including the 25% or so that already comes out of my employees check before she even gets it. Think we don't have a tax problem in this country?!?
I think it needs to be tiered in some way, based on earnings or something... Look, I don't feel bad when Exxon has to pay these taxes, because they have billions of cash laying around. However, when it comes to the tens of thousands of small businesses in this country (just like mine), who make less than $50,000 per year, a $14,400 tax per employee out of my pocket hurts, a lot. I honestly would love to hire another person to work here, but at that rate, there is no way it would be financially possible. When people ask me why I work 60 hours a week... I always joke that I just love being here! The truth it, I couldn't afford to hire anyone else even if I wanted to!
If your side of your employees FICA taxes is 550 for two weeks I went into the WRONG business.
 
darthtang aw

darthtang aw

Active Member

If your side of your employees FICA taxes is 550 for two weeks I went into the WRONG business.
No kidding. I have NEVER paid near that much in a two week period.
 
zman1

zman1

Active Member
Quote:
Originally Posted by TheClemsonKid http:///t/394350/ever-wonder-why-a-lot-of-businesses-pay-their-employees-under-the-table#post_3509923

Wanna know why a lot of businesses pay their employees under the table? Here's a wonderful real world example! Thanks to new payroll tax increases, I have one employee, and it just went from $372.93 per two week pay period to $557.47 that I pay as the employer. That's a little over $14,400 a year in taxes. And that's not even including the 25% or so that already comes out of my employees check before she even gets it. Think we don't have a tax problem in this country?!?
I think it needs to be tiered in some way, based on earnings or something... Look, I don't feel bad when Exxon has to pay these taxes, because they have billions of cash laying around. However, when it comes to the tens of thousands of small businesses in this country (just like mine), who make less than $50,000 per year, a $14,400 tax per employee out of my pocket hurts, a lot. I honestly would love to hire another person to work here, but at that rate, there is no way it would be financially possible. When people ask me why I work 60 hours a week... I always joke that I just love being here! The truth it, I couldn't afford to hire anyone else even if I wanted to!
What is this joker talking about? (Not you TheClemsonKiD) Trying to make false claims... Obviously he dosen't own or run a business........
The payroll so called tax hike is a return to 6.2 only on SSI from the temporary payroll tax (4.2) holiday. And this holiday was only on what the worker payed. Employers didn't get the tax holiday, they have been paying 6.2% this whole time. Please remember the SSI withholding stops for both when your income is 113,700 and medicare hasn't change: I told you jokers before, don't feel bad for the higher pay scale taxes because 6.2% stops being withheld




Social Security (OASDI) Program Rates & Limits



2013







Tax Rates (percent)











Social Security (Old-Age, Survivors, and Disability Insurance)











Employers and Employees, each [sup]a



6.20







Medicare (Hospital Insurance)











Employers and Employees, each a,b[/sup]



1.45







Maximum Taxable Earnings (dollars)











Social Security



113,700







Medicare (Hospital Insurance)



No limit



 
theclemsonkid

theclemsonkid

Member
Quote:
Originally Posted by zman1 http:///t/394350/ever-wonder-why-a-lot-of-businesses-pay-their-employees-under-the-table#post_3509941
My guess is because you have no employees making $506,965.52 + anually - That's the only way to get even close to the claim "two week pay period to $557.47":
$113700 X .062 = SSI $7049.40
$506,965.52 x .0145 = medicare $7351
7351+7049.40 =$14,400
I
It's not a "claim" buddy. I just saw it on my online banking and about flipped out. I immediately called my Payroll company and of course my lady was gone for the weekend already... So I called the state department of taxation and they said that the payroll taxes had changed. I'm clearly going to follow up with my payroll company on Monday, cause I have a feeling I'm getting screwed here somewhere.
I made nowhere even on the same continent of $506,000 last year, more like $56,000. And my employee gets paid a flat rate of $650 per week... I'm not trying to be a smartass here, I am just trying to figure out why my rate almost double since my last December payroll.
 
zman1

zman1

Active Member
It's obviously a mistake, your contribution would not have changed as the employer for SSI and medicare. As an employer you may have other responsibilities that may have changed, Fed and State unemployment tax, disabilty etc...
Now the employees payroll tax SSI would have changed, increased by 2%, back to the original 6.2. I am an employee (PS my net was reduced by the 2% increase) and my wife is an independent conrtrator. So I pay only the 7.65% (6.2+ 1.45) and she pays both employer and employee 15.30% (but you get to deduct 50% of SSI payment on the first page of return - net she really only pays some where around12%). for SSI and medicare
 
reefraff

reefraff

Active Member
Quote:
Originally Posted by TheClemsonKid http:///t/394350/ever-wonder-why-a-lot-of-businesses-pay-their-employees-under-the-table#post_3509947
It's not a "claim" buddy. I just saw it on my online banking and about flipped out. I immediately called my Payroll company and of course my lady was gone for the weekend already... So I called the state department of taxation and they said that the payroll taxes had changed. I'm clearly going to follow up with my payroll company on Monday, cause I have a feeling I'm getting screwed here somewhere.
I made nowhere even on the same continent of $506,000 last year, more like $56,000. And my employee gets paid a flat rate of $650 per week... I'm not trying to be a smartass here, I am just trying to figure out why my rate almost double since my last December payroll.
i do believe this is paid quarterly, I suspect this was your quarterly payment for the employee
 
zman1

zman1

Active Member
Quote:
Originally Posted by TheClemsonKid http:///t/394350/ever-wonder-why-a-lot-of-businesses-pay-their-employees-under-the-table#post_3509947
It's not a "claim" buddy. I just saw it on my online banking and about flipped out. I immediately called my Payroll company and of course my lady was gone for the weekend already... So I called the state department of taxation and they said that the payroll taxes had changed. I'm clearly going to follow up with my payroll company on Monday, cause I have a feeling I'm getting screwed here somewhere.
I made nowhere even on the same continent of $506,000 last year, more like $56,000. And my employee gets paid a flat rate of $650 per week... I'm not trying to be a smartass here, I am just trying to figure out why my rate almost double since my last December payroll.
650*2 = $1300 gross per pay. Employer SSI and Medicare cost 7.65% = $99.45. If you are paying $557.47 there is huge mistake or you need to find a new payroll company, their charging too much to do payroll.
I am thinking your confusing payroll tax with all - total taxes withheld for the employee and that would vary on W4 choices, too. In this case the Fed, state, city, and any additonal withheld tax listed on w4's are coming out of the emplyees gross pay ($1300), you are required to withhold it an make paymets to the appripriate agencies.
 
darthtang aw

darthtang aw

Active Member

i do believe this is paid quarterly, I suspect this was your quarterly payment for the employee
Yes it is done quarterly. Atleast mine are.
 
deejeff442

deejeff442

Active Member
i 1099 all my help.i have not had an employee working w2 for 10 years.it wouldnt be so bad here in texas but,up in NY workers comp is mandatory and costs a fortune .my sister in law lives in OHIO.she came to visit over xmass.man she gets hammered in taxes there.plus she said she has a Girard OHIO city tax .she made 56k and just that tax is $2200 .brutal.
 
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