We’re so pleased to welcome aboard a new contributor to our blog. Jessica is incredibly enthusiastic about helping small businesses improve their payroll function, and we’re looking forward to hearing a lot more from her in the coming months. So without further ado, take it away, Jessica…
The Social Security Administration releases updates to the wage-base limit in October of each year. The FICA tax rate for employees and employers is 7.65% each — 6.2% for OASDI up to the wage base ($115,500), and 1.45% for HI (no maximum). Also, there is a 0.9% additional Medicare tax that applies to all wages in excess of $200,000 ($250,000 for joint returns; $125,000 for married taxpayers filing a separate return). (Code Sec. 3101(b)(2)) In effect, this makes the Medicare tax rate 2.35% for wages in excess of those amounts.
So… all of this may sound like something you want to pass on to your bookkeeper or accountant. Better yet, you really don’t care because you just realized that you won’t even meet that limit this year… or even next year. Well, let me share something with you that may bring you closer to reaching that seemingly impossible goal of OASDI freedom!
Using a time-recording system could potentially help save a business thousands of dollars, depending on the size of their work force. Think about it: how many of your employees will ever reach the wage base limit for Social Security tax? Keeping that in mind, virtually all of the wages you pay to your employees are taxable for a tax, or two, or three — there’s hardly any “break” for you, Mr. John Q. Smallbusinessowner. Just 10 minutes of “lost time” a week for an employee earning $10.00 an hour equates to $1.67 per week. Multiply that by 52 weeks and you’ve already spent over $85.00 on nothing. Now, calculate the figure on 20 employees and the number instantly disturbs you: $1736.80.
And guess what? This doesn’t include all of the employer taxes that you are paying on these wages that don’t really exist! As a small business, we understand the importance of both spending money wisely and saving where we can. Just think… you could be saving thousands of dollars just by using a time clock! Talk about saving pennies! Give us a call and let us show you that, with Acroprint… it’s always time for business!!!