Client in-house payroll, but now has an other state employee

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#1
Wiles  
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CA
CA employer does all of their payroll in house and wants to keep it that way. However, they just added an employee working & residing in AZ. They are asking what's the easiest way to deal with this.

They want to keep doing their payroll in house for all of their CA employees but would prefer to have a payroll service deal with the AZ employee. Perhaps the payroll service can file all the AZ stuff and a W-3 & W-2 for this single employee, but no 940 or 941.

When the employer files their 940 & 941, they will need to make manual adjustments to include that employee's wages & withholdings.

Anybody have another idea?
 

#2
CathysTaxes  
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One employee payroll service would be a large expense. It shouldn't be too hard to add another state to their payroll. Setup a withholding and unemployment account, file new hire report, etc. IMO, the biggest issue would be if AZ requires the registration and filing of state income tax returns and annual reports.

Wouldn't they want to do all W2s together?
Cathy
CathysTaxes
 

#3
KoiCPA  
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Location:
Washington
I think it's a huge mistake to mix and match payroll services like this.

I've actually dealt with it myself to a certain extent. One of my employees used a PEO for their payroll of everyone but the corporate officer. So the employees and officer had to be aggregated for state filings, but were separate in federal filings. Too much room for mistakes there.

The only way I see this working is for the CA employer to get after-the-fact payroll entered into the payroll service and let the payroll service handle all of the tax filings. Even that seems like making life more complicated than it needs to be.
 


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