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Small Businesses Can Defer Payroll Taxes

Employers are responsible for withholding Social Security and Medicare payroll taxes from their employees’ paychecks and paying these taxes along with the employer’s share to the IRS each month.  The Social Security tax is 12.4% total, with 6.2% withheld from the employee’s wages and the employer paying 6.2%.  The Medicare tax is 2.9%, with 1.45% withheld from the employee’s wages and the employer paying 1.45%.

As part of aid to businesses provided in the Coronavirus Aid, Relief and Economic Security Act (CARES Act), employers can defer depositing the employer’s share of Social Security taxes until December 2021. For payroll periods starting March 27th through the end of this year, employers may defer their share of the Social Security tax (6.2%) and not deposit it with the IRS. Instead of depositing the usual amount of payroll tax, employers can simply hold back their portion of the Social Security tax each month and use it for other operating expenses.  *Please note this only applies to the employer’s portion of the Social Security tax.  Employers may not defer the employee’s part of the Social Security tax, and employers must still deposit both the employee’s and the employer’s portion of the Medicare tax each month.

Employers who decide to defer their part of the Social Security tax have until the end of next year to start depositing the amount they deferred. Half of the deferred payroll tax amount must be deposited with the IRS on December 31, 2021, with the other half due by December 31, 2022. 

All employers may take advantage of this payroll tax deferral, including employers who have received a Paycheck Protection Program (PPP) loan. Employers who receive a PPP loan may defer the employer’s portion of Social Security taxes until the date their PPP loan is forgiven. Once an employer receives a decision from its bank that its PPP loan has been forgiven, the employer is no longer eligible to defer payroll taxes. However, the employer can still wait until December 31, 2021 to deposit the first half of the payroll taxes they deferred prior to the date their PPP loan was forgiven. The second half is due December 31, 2022.

For more information from the IRS about payroll tax deferral, please click here.

This payroll tax deferral is not the same as the payroll tax credits that employers may take for providing paid leave to employees or the employee retention credit. The IRS has detailed information about these credits here.

If you have questions, you can contact us at fuba@fuba.org. For small business resources on the coronavirus, please visit fuba.org/coronavirus-resources. Our website FUBA WC on Twitter FUBA WC on Facebook     You are receiving this email because you are a member of FUBA.



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The Top 7 Benefits of Payroll Automation Software for Small Businesses

This blog post was originally published by UKG – inspiring every organization to become a great place to work through HR, pay, workforce management, and culture technology built for all. For small business owners, keeping your “payroll machine” running smoothly is a top priority. Payroll is the lifeblood of your employee satisfaction and trust, financial stability, and overall business health. But managing payroll can be a time-consuming and error-prone process, especially as your company grows. Manually calculating wages, withholding taxes, generating reports, and keeping ahead of ever-changing regulations can quickly become overwhelming. This is where payroll automation software comes in — a powerful tool designed to streamline the process and free you to focus on what matters most: running and growing your business. The Power of Automation Manual payroll tasks are not only slow and labor-intensive but also prone to mistakes. A single miscalculation in tax withholdings or overtime pay can lead to very unhappy employees, large IRS penalties, and a heavy financial burden for your business. Payroll automation software eliminates these issues by streamlining the entire process, from data entry and calculations to tax filing and generating reports. This not only saves your payroll team a lot of time but also minimizes the risk of errors that can lead to costly penalties and employee dissatisfaction. Let’s dig deeper into the productivity and time-saving benefits of automated payroll software and see exactly how it simplifies the payroll process: Automated data entry Payroll automation software offers seamless data integration with existing timekeeping systems and employee self-service portals. This eliminates the need for manual data entry of hours worked, deductions, and benefits elections, saving you countless hours each pay period. Imagine the time your payroll team will save by not having to manually enter hours from paper timesheets or track down missing information from employees. Streamlined calculations and withholdings Payroll software handles all the complex calculations for wages, taxes, deductions, and overtime pay. You can set up automatic deductions for benefits, garnishments, and retirement contributions, ensuring everything is accounted for accurately. No more spending hours poring over spreadsheets or relying on error-prone manual calculations. Automated tax filing and payments At last — no more scrambling to meet tax deadlines or manually filing forms! Automated payroll software can handle federal, state, and local tax calculations, deductions, and deposits, ensuring timely payments and compliance with tax regulations. This eliminates the stress of manual tax filing and ensures you’re never late on a tax payment. Effortless report generation Need to analyze payroll trends or generate reports for budgeting purposes? Automated payroll software provides instant access to detailed reports on payroll expenses, employee earnings, and tax liabilities. This allows you to make data-driven decisions and gain valuable insights into your labor costs. You can easily identify areas for cost savings, track employee benefits use, and forecast future payroll expenses. By automating these tasks, you can reclaim hours previously spent on manual payroll processing. This frees up time to allow you to focus on more strategic initiatives, such as culture-building, employee development, and business growth. Imagine the benefits of investing that saved time into creating a great place to work for all and innovating new and better ways to manage all your business functions! However, the benefits of payroll automation software go beyond simply saving time. By automating tasks, you’ll also see a substantial reduction in labor costs associated with manual payroll processing. Hiring and training dedicated payroll staff Payroll processing requires dedicated staff with specialized knowledge. Payroll software eliminates the need for additional payroll personnel, allowing you to allocate those resources to add value elsewhere within your business. You can also free up your budget for other business needs or invest in additional staff for core business functions. Reduced errors and penalties Even a small error in payroll calculations can result in penalties from the IRS or state tax agencies. Automated payroll software minimizes the risk of errors, significantly reducing the likelihood of incurring costly fines and penalties. This can translate to meaningful cost savings for your business. Improved compliance Noncompliance with tax regulations and complex payroll laws can result in hefty fines and penalties. Payroll automation software ensures your business stays current with the latest regulations, reducing the risk of noncompliance and associated fees. You’ll have peace of mind knowing you’re always adhering to all legal requirements. All these cost savings can be reinvested back into your business, allowing you to focus on growth and development. For example, you can invest in employee learning and development, expand your product line, or offer more competitive benefits to attract and retain top talent. By automating payroll, you’re not just saving money — you’re investing in the future of your business. Payroll Automation Software: Accuracy You Can Count On An automated payroll system ensures that your employees are paid accurately and on time, every time. It’s designed to handle all complex calculations, including taxes, deductions, and overtime pay, to reduce the risk of human error that can lead to missed payments or incorrect paychecks. 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Empower Payroll with UKG Ready One of the best ways to grow your smaller business

The 4 Benefits of AI for Small HR Teams

This blog post was originally published by UKG – inspiring every organization to become a great place to work through HR, pay, workforce management, and culture technology built for all. Artificial intelligence (AI) is everywhere today, and for many of us, it can all seem a bit overwhelming — especially when it comes to leveraging it for your business and reaping the benefits of AI in HR. But once you’ve got all the facts, it’s easy to see how AI can make day-to-day work for you and your HR team more efficient and impactful than ever.  Let’s start with the basics. Simply put, AI is the use of computers to do things that have traditionally required human intelligence. Its algorithms classify, analyze and form predictions from data, then learn from the new data created to improve over time. 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It leads to better retention through tracking the skillsets of employees and helping them to further develop and build upon those skills, and it works with them to build a career path within the organization. To do this, there needs to be a commitment to support fair and consistent performance and succession strategies that identify, nurture, and develop top talent. Small businesses often have flat structures, which allows employees more visibility and connection. These broader learning opportunities ultimately keep everyone invested in the company’s culture, and both internal and external job seekers will view your organization as one that prioritizes career development. 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It’s important that employees earn enough to feel financially stable, and that your workplace promotes equal pay practices, but what more can be done? Offering programs that give employees access to their pay before pay day, for instance, has been linked to improvements in productivity and reduced absenteeism.   Celebrate your people’s achievements to foster a sense of purpose Nearly 50 percent

The Top 7 Recruitment and Employee Retention Strategies for Small Businesses

This blog post was originally published by UKG – inspiring every organization to become a great place to work through HR, pay, workforce management, and culture technology built for all. In today’s competitive job market, attracting and retaining top talent is about more than just offering a competitive salary. Small businesses have a unique advantage over larger corporations: the ability to create a personal, responsive, and value-driven workplace culture. A strong company culture not only keeps employees engaged but also helps businesses thrive. However, many small businesses struggle with hiring and retention due to limited budgets and a lack of formal HR infrastructure. A recent study by HR.com’s HR Research Institute and UKG found that while 60% of SMBs are concerned about retaining key talent, only about a quarter are leveraging strategic HR technologies to improve hiring, culture, and retention. This presents an opportunity: the right technology can help small businesses overcome these challenges while fostering a workplace culture where employees want to stay. At Pinkerton Payroll & Insurance, we understand these struggles firsthand. Our HR technology solutions help businesses streamline processes, improve employee experiences, and ultimately build a stronger workforce. Why Company Culture Matters More Than Ever A strong workplace culture has direct benefits for businesses of all sizes, but for SMBs, it’s a game-changer. Here’s why: Attract Top Talent: When your culture aligns with your mission and values, it becomes a magnet for like-minded professionals who are excited to contribute. Boost Engagement and Trust: Employees who feel valued and supported are more productive and committed. Reduce Turnover Costs: Hiring and training new employees is expensive. A positive culture builds loyalty, saving you time and money in the long run. 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Impress Candidates with a Smooth Hiring ProcessSpeed and efficiency matter in today’s job market. Offer online applications, skills assessments, and video interviews to keep the process seamless. Automated updates ensure candidates stay informed and engaged throughout the process. Use Data to Refine Your Recruitment StrategyHR analytics can help businesses track applicant flow, identify hiring trends, and predict future workforce needs. Data-driven insights ensure your hiring efforts are targeted and effective. Simplify OnboardingA strong onboarding process sets employees up for success from day one. Automated workflows and centralized portals make it easy for new hires to access important information, complete paperwork, and integrate into the company culture. Invest in Employee DevelopmentContinuous learning keeps employees engaged and motivated. Provide access to online learning platforms, career development pathways, and upskilling programs to ensure long-term career growth. Support and Empower EmployeesEmployees want to feel valued. Recognition programs, pulse surveys, and open communication channels help businesses proactively address concerns and boost morale. Modernize Payroll and BenefitsPayroll and benefits are crucial to employee satisfaction. Automated payroll systems, self-service portals, and compliance tools ensure accuracy and ease of access—reducing errors and enhancing employee confidence in their pay and benefits. Thinking Outside the Box: Addressing Hidden Employee Pain Points Beyond the usual perks and benefits, businesses should consider less obvious factors affecting retention—like employee commutes. Studies show that long, stressful commutes contribute to burnout and job dissatisfaction. Larger corporations may offer transportation solutions, but SMBs can explore creative alternatives, such as remote work options, commuter benefits, or flexible scheduling. 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