Operational Gaze:
How to Run Payroll in New York?

April 11th 2024

Running payroll in New York is no easy task, and it’s definitely costlier compared to other states. According to a report from NPR, New York is one of the states with the highest tax burdens in 2023. Aside from taxes, employers will also need to deal with a mix of state and federal labor requirements that can significantly affect the payroll process. Wrapping your head around all of these requirements can be challenging, especially for new employers. And that is precisely why we made this guide.

This guide aims to equip you with the knowledge and tools you need to navigate the intricate payroll landscape of the state effectively. We’ll cover everything from labor laws and pay requirements to payroll taxes and necessary forms. We will also guide you through a series of simplified steps that can help you run payroll in the Big Apple with confidence.

This Article Covers

Laws That Affect Payroll Procedures in New York
Worker Classifications in New York
Payroll Forms and Relevant Bodies in New York
Applicable Taxes in New York
Key Pay Elements That Impact Payroll in New York
Step-by-Step Guide to Payroll in New York

Laws That Affect Payroll Procedures in New York

Let’s start with the law. When it comes to payroll procedures in New York, a deep understanding of the legal landscape is not just advisable; it’s absolutely essential. You’ll have to deal with state and federal laws, both of which can significantly affect how you handle payroll procedures.

New York Laws

  • Minimum Wage: Since December 31, 2016, the New York State Department of Labor has been increasing the state’s minimum wage each year to match inflation and enhance the living conditions of its workers. In 2024, the minimum wage in the state stands at $16.00 per hour for New York City, Nassau, Suffolk, and Westchester. In the rest of the state, the minimum wage is lower, at $15.00.
  • Overtime: The overtime law in New York is closely aligned with the regulations set by the Federal Labor Standards Act (FLSA). Non-exempt employees under FLSA are entitled to overtime pay at 1.5 times their regular pay rate for any hours worked beyond 40 in a workweek. Some residential employees, on the other hand, must receive this increased pay rate for hours worked beyond 44 in a workweek. 
  • Breaks or Lunch Period: In New York State, employers must give their employees time off for meals if they work a certain number of hours. Usually, if an employee works more than 6 hours, the employer must provide a 30-minute unpaid break. There are also specific rules for different types of workers. Factory workers can get a 60-minute lunch break between 11:00 a.m. and 2:00 p.m. and another 60-minute break halfway through their shift if it’s longer than six hours and starts between 1:00 p.m. and 6:00 a.m. Non-factory workers, on the other hand, can take a 30-minute lunch break between 11:00 a.m. and 2:00 p.m. for shifts of six hours or longer during that time period. They also get a 45-minute break halfway through their shift if it’s longer than six hours and starts between 1:00 p.m. and 6:00 a.m.
  • Pay periods: As per Section 191 of the New York Labor Law, manual workers must receive weekly pay, while clerical and other workers should be paid at least twice a month.
  • New York Paid Safe and Sick Law: The Paid Safe and Sick Leave Law lets employees use their sick leave to take care of themselves or a family member, and also to get help from legal or social services. If an employer has 100 or more employees, they must offer up to 56 hours of paid leave every year. If they have 5 to 99 employees, they have to give up to 40 hours of paid leave each year.
  • Payroll Recordkeeping: Businesses in New York State need to keep records to make sure their tax returns are correct. These records include things like canceled checks, receipts, and sales records. Even after filing tax returns, these records must be kept for at least three years. If the Tax Department asks, employers are required to show them these records.
  • Payroll Taxes: In New York, employers have to take out and pay personal income taxes on the money they give to their employees as wages, salaries, or bonuses. Employers also need to give their employees State Disability Insurance (SDI) for accidents or illnesses that happen outside of work, along with other payroll taxes.
  • New York Secure Choice Savings Program: In October 2021, New York Governor Kathy Hochul approved a law establishing the New York Secure Choice Savings Program, which aimed to address the retirement savings gap in the state. The law mandates that businesses in New York with ten or more employees offer retirement plans. Private businesses with a minimum of 10 employees, operating for at least two years, and not already providing qualified retirement plans like a 401(k) or 403(b) are obligated to implement an automatic enrollment IRA program.

Federal Laws

  • Fair Labor Standards Act: The FLSA, established in 1938, stands as a pivotal federal law governing hourly wages, overtime pay regulations, employee classification standards, child labor provisions, and the documentation of employee work hours. New York follows FLSA standards in addition to some of its state laws.
  • Family and Medical Leave Act: The FMLA, another significant federal statute, governs workplace leave entitlements. It grants eligible employees the right to take up to 12 weeks of unpaid leave for circumstances such as childbirth, adoption, or tending to a family member facing a severe health condition. New York employers fall under the purview of the Family and Medical Leave Act (FMLA) if they maintain a workforce of a minimum of 50 employees for a duration of at least 20 weeks in either the current or preceding year.
  • Federal Insurance Contributions Act (FICA) Tax: Social Security and Medicare taxes, collectively known as FICA, are contributions made by both employees and employers on Social Security and Medicare-covered wages. For Social Security, the tax rate is 6.2% of the maximum taxable wages, and once you reach this maximum, you don’t pay more until the next year. The maximum taxable wage for Social Security is adjusted annually. As for Medicare, it’s 1.45% for wages up to $200,000 and 2.35% for wages exceeding $200,000, without a wage cap.

HR Laws

  • Child Labor Requirements: The NYS Division of Labor Standards sets rules for how long and when minors can work and the kinds of jobs they can do. Children under 13 can’t work unless they get a special permit from the Commissioner of Labor. Employers must create flexible schedules with fixed shifts and meal breaks for minors. While there’s no specific law on breaks for minors, all employees, regardless of age, are entitled to a 30-minute break.
  • Posting Requirements: As per the Pay Transparency Law, starting from September 17, 2023, NYS employers with at least four employees must include the salary or salary range in their job postings for positions that will be done, at least partly, in New York. The job posting should honestly reflect the expected pay that the employer believes is accurate at the time of posting, giving applicants a clear idea of what to expect in terms of compensation.
  • New York New Hire Reporting: You need to inform New York State about new or rehired employees within 20 days of their start date. This date is when the employee either starts providing services for pay (like wages or tips) or becomes eligible to earn commissions solely based on services.

Worker Classifications in New York

Worker misclassification is a problem that has plagued many states, and New York is no exception. According to a report from the Center for New York City Affairs (CNYCA), approximately 873,000 workers in New York State’s lower-paying industries, which make up about 10% of the state’s workforce, are incorrectly labeled as “independent contractors.” This misclassification results in workers earning much less than regular payroll employees. They’re also deprived of the fundamental benefits and protections that payroll workers enjoy. 

To help avoid making this mistake in your business, it’s crucial to understand the fundamental factors that differentiate employees and contractors. New York also uses what’s called the Common Law Test, which you can use as a guide to determining worker classification.

Employees vs Contractors

Employee and contractor classifications hold significant implications for payroll processing and labor law compliance. To run payroll successfully, you need to understand which is which and how these distinctions can affect how you run payroll.

For starters, employees are individuals who work under the direction and control of an employer, typically following set schedules and company procedures. They are subject to tax withholding, with employers responsible for deducting federal, state, and local income taxes, as well as Social Security and Medicare taxes from their wages. Employees are also entitled to law-mandated benefits like minimum wage and overtime pay.

In contrast, independent contractors are self-employed individuals who have more autonomy in how they perform their work. They use their own tools, equipment, and resources and are responsible for their business expenses. Independent contractors negotiate their compensation on a project or contract basis, often without tax withholding. This means contractors are responsible for paying their own income taxes, including estimated quarterly tax payments. 

Common Law Test

The Common-Law Test, used by the IRS and many states, helps decide if a worker is an employee or an independent contractor. To do this, it considers three main aspects:

  1. Behavioral Control: This means the employer’s influence over how the work is done, including where, when, and how it’s performed. Even if a worker is skilled and self-reliant, the employer’s control still matters.
  2. Financial Control: Financial control examines the extent to which the employer has authority over the worker’s financial aspects. Key considerations include:
  • Expenses: Does the employer reimburse the worker’s expenses related to the job? Reimbursement can imply a more employer-driven relationship.
  • Equipment and Facilities: Does the employer provide tools, equipment, or a workspace for the worker? Supplying such resources suggests a higher level of employer control.
  • Profit and Loss: Can the worker experience both profit and loss based on their work? Independent contractors typically have the potential to profit from their work and also bear the risk of financial loss.
  1. Relationship of the Parties: This looks at how the worker and the employer act together. If they have a written contract or if the worker gets benefits like sick pay or a pension, it can show an employer-employee relationship. But a big clue is whether the worker’s job is different from what the employer usually does. If it’s not different, the worker is probably an employee.

Payroll Forms and Relevant Bodies in New York

Payroll forms are all part of the payroll process. You can’t do without them. These forms are used for everything from reporting wages to filing tax withholdings. As an employer in New York, here are the key state and federal payroll forms that you’ll need to focus on:

New York Payroll Forms

  • New York Form IT-2104 (Employee’s Withholding Certificate for New York State): This form is used for dealing with state income tax withholdings and reporting other taxes. It’s pretty much similar to the federal IRS Form W-4. This form also helps determine how much should be withheld for state income taxes. Each employee needs to fill out this form. There are also variations of this form for special cases, like Native Americans, military members, or those in the START-UP NY program.
  • Form IT-201 (New York State Resident Income Tax Return): This form is required for employees who are New York state residents. It’s used to report state income tax and reconcile any tax owed or overpaid.
  • Form NYS-45 (Quarterly Combined Withholding, Wage Reporting, and Unemployment Insurance Return): This is a crucial quarterly form used to report employee wages, withholding taxes, and unemployment insurance information to the New York State Department of Taxation and Finance.
  • Form NY-45-ATT (Annual Reconciliation of Withholding Tax): This form is closely similar to Form NYS-45. It’s used for the annual reconciliation of your New York state withholding taxes. It summarizes the total wages paid and taxes withheld during the year.
  • Form MTA-305: This form is used to report Metropolitan Commuter Transportation Mobility Tax (MCTMT) information. Employers in certain New York counties must withhold and report this tax, which helps fund public transportation in the region. Form MTA-305 ensures compliance with MCTMT requirements.
  • Form NYS-209: This form is used to report employee address changes to the New York State Department of Taxation and Finance. It helps ensure that tax-related correspondence and documentation are sent to the correct address for each employee.

Federal Payroll Forms

  • W-4 Form (Employee’s Withholding Certificate): The W-4 form informs employers how much federal income tax to withhold from their employee’s paychecks. Employers in New York must ensure that employees complete this form accurately to determine the correct amount of federal tax to withhold.
  • W-2 Form (Wage and Tax Statement): At the end of each calendar year, employers in New York must provide their employees with a W-2 form. This form summarizes the employee’s annual earnings, as well as federal and state income taxes withheld. Employers must also send copies of the W-2 form to the IRS and the Social Security Administration (SSA).
  • W-3 Form (Transmittal of Wage and Tax Statements): The W-3 form is submitted to the SSA along with copies of the W-2 forms. It provides a summary of all the W-2 forms being sent. Employers in New York must ensure that the information on the W-3 form matches the information on the individual W-2 forms.
  • Form 940 (Employer’s Annual Federal Unemployment Tax Return): Employers in New York are required to report and pay federal unemployment taxes using Form 940. This form helps fund unemployment benefits for eligible workers.
  • Form 941 (Employer’s Quarterly Federal Tax Return): Employers in New York and throughout the United States use Form 941 to report income tax, Social Security tax, and Medicare tax withheld from employee paychecks. This form is submitted quarterly to the IRS.
  • Form 944 (Employer’s Annual Federal Tax Return): Some small employers in New York may be eligible to file Form 944 instead of Form 941. Form 944 is an annual return for reporting federal income tax, Social Security tax, and Medicare tax withheld from employees’ pay.
  • 1099-NEC Form (Nonemployee Compensation): Employers who hire independent contractors in New York must provide them with a Form 1099-NEC to report payments for services rendered. This form helps the IRS track income earned by self-employed individuals and contractors.

Federal and New York Payroll/ Tax Bodies

  • New York State Department of Taxation and Finance: This agency manages and enforces state tax laws in New York. It collects state income taxes, sales taxes, and other state-specific taxes. Employers in New York must register with the Department of Taxation and Finance, withhold and remit state income taxes, and report employee wages through state payroll tax forms.
  • New York State Department of Labor: Similar to the federal DOL, the New York State Department of Labor oversees labor laws specific to the state. This includes minimum wage regulations, workers’ compensation, and unemployment insurance. Employers must adhere to New York labor laws to ensure fair and lawful employment practices.
  • New York State Workers’ Compensation Board: This board administers the workers’ compensation program in the state. They handle claims, benefits, and compliance with workers’ compensation regulations.
  • New York State Department of Financial Services: This department regulates insurance and financial services in the state, including insurance-related matters affecting businesses and employees.
  • Internal Revenue Service (IRS): The IRS is the primary federal agency responsible for collecting federal taxes in the United States. It administers and enforces federal tax laws, including income tax, Social Security tax, and Medicare tax. Employers interact with the IRS when withholding and remitting federal payroll taxes, providing employee tax forms such as W-2s and W-4s, and complying with federal tax regulations.
  • Social Security Administration (SSA): The SSA manages the Social Security program, which provides retirement, disability, and survivor benefits to eligible individuals. Employers report employees’ earnings and withhold Social Security taxes, and the SSA maintains records of employees’ earnings to calculate future benefit entitlements.
  • US Department of Labor (DOL): While not directly involved in tax collection, the DOL oversees labor laws and regulations at the federal level, including minimum wage, overtime, and family and medical leave. Employers need to comply with DOL regulations to ensure fair and legal employment practices.

Applicable Taxes in New York

In New York, businesses and individuals are subject to various taxes imposed by both the state and federal governments. Here’s an overview of the applicable taxes in New York:

State Taxes

  • State Income Tax: New York has a progressive income tax system, with rates varying based on income levels. There are currently nine different income tax rates, ranging from 4% to 10.9%. The rate can also vary based on other factors like adjusted gross income, filing status, and residency.
  • New York State Unemployment Insurance Taxes (SUTA): Employers in New York are subject to unemployment insurance taxes as per the state’s rules. In 2023, the tax rates for all employers vary, falling between 2.1% and 9.9%. For new employers, the tax rate is set at 4.1%. These tax rates also include a contribution to the reemployment-services fund, which is 0.075%, and an additional tax ranging from 0.525% to 0.925%. 
  • Workers’ Compensation Insurance: On average, businesses pay between $3.00 and $3.49 for every $100 in payroll for worker’s compensation. These rates are determined by the New York Workers’ Compensation Board, which is a nonprofit organization made up of insurance companies.
  • State Disability Insurance: New York State has a Paid Family Leave (PFL) program, which provides job-protected, paid leave to eligible employees for certain family or medical reasons. Employers are responsible for deducting contributions from employees’ paychecks to fund this program. The premium rate for Paid Family Leave starting on January 1, 2023, will be 10% lower than the rate in 2022. This new rate will be 0.455% of an employee’s wages per pay period, with a maximum annual contribution of $399.43.
  • Metropolitan Commuter Transportation Mobility Tax (MCTMT): The MCTMT is a tax imposed on employers and self-employed individuals in the Metropolitan Commuter Transportation District (MCTD). This tax helps fund public transportation services in the region. Employers are responsible for withholding MCTMT from employee wages. Starting on July 1, 2023, in New York City, the highest MCTMT rate will increase from 0.34% to 0.60% for employers with payroll expenses exceeding $437,500.

Federal Taxes

  • Federal Income Tax: The IRS adjusted the tax brackets for 2023 to adjust for inflation. Currently, there are seven federal tax rates, ranging from 10 percent to 37 percent. The highest rate, 37 percent, applies to individuals earning over $539,900 and couples filing jointly earning over $693,750. Employers are responsible for withholding federal income tax from employees’ paychecks based on their filing status, and allowances claimed on their Form W-4.
  • Federal Insurance Contributions Act (FICA) Tax: FICA taxes are composed of two parts: Social Security and Medicare taxes. Employers and employees each contribute a portion of their income to fund these federal programs. The Social Security tax has a wage cap, while the Medicare tax applies to all earned income.
  • Federal Unemployment Tax Act (FUTA): FUTA is a federal tax that funds unemployment benefits at the national level. Employers pay this tax based on the wages they pay to employees, and it complements the state unemployment insurance program.

Key Pay Elements That Impact Payroll in New York

Minimum Wage

Since December 31, 2016, the New York State Department of Labor has been increasing the minimum wage each year to match inflation and enhance the living conditions of its workers. The current minimum wage stands at $16.00 in New York City, Nassau, Suffolk, and Westchester. In the rest of the state, the minimum wage is $15.00.

Governor Kathy Hotchul also recently signed Senate Bill S4006 on May 3, 2023. The said bill aims to increase the minimum wage slowly until 2026, reaching $17 per hour in New York City, Long Island, and Westchester County and $16 per hour in the rest of the state. After 2027, the minimum wage will increase each year to keep up with inflation. Given the constant change in the state minimum wage, it’s best to keep yourself updated through the New York Department of Labor.

Overtime

New York State has its own rules for overtime pay, which are in addition to federal laws like the Fair Labor Standards Act (FLSA). For most employees, if they work more than 40 hours in a week, they should get paid 1.5 times their usual pay rate for those extra hours. But for certain residential employees, this applies after working over 44 hours a week.

Some jobs don’t have to follow the federal FLSA rules but still need to pay overtime under New York State Labor Law. These jobs must pay overtime at 1.5 times the state minimum wage, no matter what their regular pay rate is. So, it’s important to check both federal and state rules to figure out how much overtime an employee should get.

However, some jobs are exempt from both the state labor law and the FLSA when it comes to overtime pay. These jobs include:

  • Executives
  • Outside salespeople
  • Government workers
  • Farm laborers
  • Volunteers
  • Interns
  • Taxicab drivers
  • Religious order member

Learn more details about New York Overtime Laws.

Commission and Bonus Amounts

Article 6 of New York State Labor Law outlines rules for paying commission-based workers. Commissions are earnings based on sales and salespeople who primarily engage in sales and are compensated through commissions fall under this law. However, managerial or administrative employees are exempt.

The law mandates a written agreement between the employer and the salesperson, specifying how earnings are calculated, payment frequency, reconciliation terms (if applicable), and other relevant details. Upon request, employers are required to provide a statement of the salesperson’s earnings.

Tip Credit

Tip credit is a practice where employers can count an employee’s tips towards meeting the minimum wage requirement alongside the wage paid directly by the employer.

Under New York State law, employers, excluding building services, can use tip credit to meet the minimum wage requirement of the state. For instance, food service workers in New York City with a minimum wage of $16.00 per hour can have their employers combine a cash wage of at least $10.65 with a tip allowance of up to $5.35 per hour.

Pay Stub Laws

In New York State, under the Wage Theft Prevention Act, employers must furnish a Pay Stub, often referred to as a Statement of Wages, alongside wage payments. This detailed payment statement must include the following information:

  • Work dates covered by the payment
  • Employee’s name
  • Employer’s name
  • Employer’s address and phone number
  • Pay rate (hourly, daily, weekly, etc.) and its basis
  • Total earnings before deductions
  • Deductions made
  • Any allowances considered in minimum wage calculations
  • If applicable, home care aide benefits as defined in section 3614-c of the public health law
  • Any prevailing wage supplements claimed under Article 8
  • Net wages received

Employers must also provide a written explanation of wage calculations upon request by an employee.

Workers’ Compensation Insurance

Almost all New York State employers are required to offer workers’ compensation coverage for their workers as per Worker’s Compensation Law (WLC) §25-A. They must also display a notice of coverage at their business location(s). This can be found under WCL §51. Determining if a worker is covered by the WCL is always based on facts decided by the New York State Workers’ Compensation Board

New York Pay Frequency Laws

New York State labor law mandates that manual workers must receive weekly pay, while clerical and other employees should be paid at least twice a month. Employers who qualify can request permission to pay manual workers less often than weekly. For further details and eligibility criteria, you can refer to the Frequency of Pay Frequently Asked Questions from the New York Department of Labor.

Garnishments and Deductions

In New York State, garnishment and deduction laws govern the process of withholding a portion of an employee’s earnings for various purposes:

  • Regular Garnishments: The amount garnished is typically 10% of the employee’s gross earnings. However, there is a “gen de” rule in place, which ensures that the employee benefits when child support is active. This means that if child support is also being deducted, the garnishment amount will be adjusted to ensure the employee retains a reasonable portion of their income.
  • Student Loans: For student loan garnishments, up to 15% of the employee’s disposable earnings can be withheld. It’s important to note that if multiple types of garnishments are in effect simultaneously, the first filed garnishment will receive the full 15%, while subsequent garnishments will share the remaining 10%. 
  • NYS Tax Levies: When it comes to New York State tax levies, the garnishment rate is set at 10% of the employee’s gross earnings. This deduction is enforced to satisfy outstanding state tax obligations.

Final Paycheck

According to New York labor law §191, when an employee is terminated, the employer must pay any unpaid wages on the regular payday for that period.

For sales commissions, there are specific regulations in place under §191C. If a sales representative is terminated:

  • Any earned commission must be paid within five business days of termination.
  • If the earned commission is not due at the time of termination, it should be paid within five business days after it becomes due.

Step-by-Step Guide to Payroll in New York

  1. Identify Payroll Rules Applicable to Your Company: Before diving into payroll, it’s crucial to understand the specific payroll rules and regulations that apply to your business in New York. It’s also important to look into the key pay elements that can affect payroll. This includes minimum wage laws, overtime regulations, and tax requirements. Don’t forget to familiarize yourself with state and federal labor laws to avoid costly legal penalties.
  2. Set Up Your Business as an Employer: If you haven’t already, ensure your business is legally set up as an employer. This involves obtaining an Employer Identification Number (EIN) from the IRS. An EIN unique number is necessary for tax reporting and payroll processing. You can apply for an EIN online by filling out the Form SS-4 on the IRS website.
  3. Register with the state of New York: If you’re a new business or household employer in New York, it’s essential to register for unemployment insurance (UI), wage reporting, and withholding tax via NY Benefits Express (NYBE). For agricultural businesses, nonprofit organizations, or Indian tribes, registration can be done on the New York Department of Labor’s website. Your New York State Identification Number is primarily for state income tax withholding, and it typically involves using your Federal EIN with a location code if applicable. Additionally, your UI employer registration number will be assigned separately. To streamline the process and file electronically, create an online services account for added convenience and efficiency in managing your payroll and tax obligations.
  4. Determine Employee Classification: Properly classify your employees as either full-time, part-time, exempt, non-exempt, or independent contractors. Accurate classification is vital for complying with wage and hour laws and determining tax obligations. To do this accurately, you can use the Common Law Test as your guide.
  5. Set Up Your Payroll Process: It’s crucial to establish a consistent payroll cycle tailored to your business needs. Common payroll frequencies in New York include weekly and semi-monthly, depending on their industry and job position. It’s imperative to communicate this payroll schedule clearly to your employees, ensuring they are aware of when to anticipate their paychecks. You should also determine how you want to pay your employees, be it in cash or direct deposit. A well-defined payroll cycle helps maintain order, streamlines financial planning, and fosters trust among your workforce.
  6. Collect Employee Payroll Paperwork: During the onboarding process, it’s crucial to gather essential employee payroll paperwork to kickstart the payroll process smoothly. This paperwork includes critical forms such as the W-4 for federal tax withholding, the I-9 Verification to verify an employee’s eligibility to work in the United States, and details for setting up direct deposit. Additionally, employees in New York must complete Form IT-2104, known as the NY State Withholding Allowances Certificate, to determine the appropriate amount of state income tax to withhold from their paychecks. Ensuring that all these forms are accurately completed and on file is not only a legal requirement but also essential for accurate payroll processing and tax compliance.
  7. Track Time and Attendance: Implement a reliable time and attendance tracking system to record employee hours accurately. This can include timesheets, time clocks, or mobile time-tracking tools. Ensure all employees record their hours correctly and consistently. This is a crucial part of maintaining accurate payroll records.
  8. Compute Gross Earnings: Start by collecting, reviewing, and approving employee timesheets. Calculate your employees’ gross earnings based on their hourly wages or salaries and the hours they’ve worked. Include any overtime pay, if applicable, and consider bonuses or commissions.
  9. Calculate Payroll Taxes: Determine the federal and state payroll taxes you need to withhold from employees’ paychecks. This includes income tax, Social Security, and Medicare. Use tax tables provided by the IRS and the New York Department of Taxation and Finance to calculate these deductions accurately.
  10. Payroll Deductions: Deduct other items from employees’ pay as necessary, such as health insurance premiums, retirement contributions, and any wage garnishments ordered by the court. Ensure compliance with federal and state laws regarding these deductions.
  11. File Applicable State and Federal Taxes: Federal tax payments are made through the Electronic Federal Tax Payment System (EFTPS). The schedule for depositing these taxes depends on your business type, either monthly or every other week, as assigned by the IRS. Monthly depositors must pay by the 15th day of the following month, while every other week, depositors should pay according to when wages are paid. It’s important to distinguish between depositing and reporting taxes – if you deposit both monthly and semi-weekly, reporting is done quarterly or annually using Form 941 or Form 944. Additionally, for New York state tax filings, you typically pay withholdings within three or five days after exceeding $700, although many businesses prefer to pay these amounts with each payroll. Filings are usually done using forms like NYS-1 and NYS-45.
  12. Process Payroll and Pay Employees: Generate paychecks or direct deposits for employees based on their gross earnings, tax deductions, and other deductions. Clearly communicate pay stubs to employees, detailing gross pay, deductions, and net pay. Ensure you pay employees on time, as per your chosen pay schedule.
  13. Maintain Payroll Records: Keep comprehensive payroll records for each pay period, including pay stubs, tax filings, timecards, and employee contracts. Retain these records for at least three years, even after filing tax returns. These records are going to come in handy in case of audits or disputes.

Final Thoughts

Navigating the intricacies of running payroll in New York can be a complex task. But with the right knowledge and tools, you can ensure that your payroll runs smoothly and your business remains compliant with state and federal regulations.

If you’re looking to streamline your payroll operations further, consider exploring our 6 recommended apps tailored for payroll in the US. Additionally, for those with established systems, we’ve shared 10 valuable tips to optimize your payroll processes. Although not without its challenges, with the right practices and tools, you can confidently navigate the realm of payroll management in New York.

Important Cautionary Note

This content is provided for informational purposes only. While we make every effort to ensure the accuracy of the information presented, we cannot guarantee that it is free of errors or omissions. Users are advised to independently verify any critical information and should not solely rely on the content provided.

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