Employer Payroll Deposits: A Small Business Reference Guide

As an employer, you are required to withhold income taxes and pay employer payroll taxes. Employers are expected to make deposits to the IRS for these taxes. Typically, you don’t have to worry about the due dates of these taxes; however, as the end of the year approaches, you should keep an eye out for a notice from the IRS which may indicate that your deposit schedule has changed.

Payroll Deposit Schedules

Here’s a quick primer on payroll deposit schedules.

There are two deposit schedules;

  • Monthly

  • Semiweekly

As an employer, your company is working with one of these two deposit schedules based on a 4-quarter look back period.

If during the 4-quarter look back period, you reported $50,000 or less of taxes on your Form 941, then you are a monthly schedule depositor.

If during the 4-quarter look back period, you reported more than $50,000 then you are a semiweekly schedule depositor.

For example, a 4-quarter look back period for the calendar year 2018 would include the following quarters:

  • July 1, 2016, through September 30, 2016

  • October 1, 2016, through December 31, 2016

  • January 1, 2017, through March 31, 2017

  • April 1, 2017, through June 30, 2017

Once your deposit schedule is determined suitable, you will need to maintain for a calendar year.

Most payroll departments will handle the deposits automatically; however, you should keep an eye out for a notice from the IRS informing you of a change in deposits schedule. These notices usually are sent out during the fourth quarter calendar year, and they are effective January 1 for the new year.

If you receive this notice, you should make the appropriate changes in your payroll systems because IRS will assess hefty penalties for being on the wrong deposit schedule.

Special Circumstances

There are two special circumstances: new employers and $100,000 deposit rule.

New employers are monthly schedule depositors for their first calendar year.

The $100,000 rule states that if a company “accumulates $100,000 or more in taxes on any day during a monthly or semiweekly deposit period,” the company must deposit the tax by the next business day.

Partner with a Payroll Specialist

You don’t need to worry about payroll tax due dates when you partner with Basis 365. We work with you to ensure you are on a proper deposit schedule and that your payments are regularly being made. To learn more about our payroll services, contact us today.