How It Works
The concept is simple:
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Money that companies pay as compensation for tools and other employee business expenses are not subject to payroll taxes.
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“But I’m not paying my employees for tools”
Are you sure? How much would you pay them if they did not bring any tools to the job..?
The logic is simple and recognized by the IRS and industry experts…
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If you are paying your employee in part, for the value of their tools and equipment,
then those payments can and should be separated from wages
from wages for services.
Now, by using Second Check’s software with built-in government
regulated rating factors, you can start paying your employees for
those tools and other business expenses using our exclusive fully compliant system.
Simply put, you can start paying your employees a reimbursement payment for those
business expenses, instead of including them in their wages. Those payments will
NOT be subject to taxation or most insurances.
Your employees will receive 2 checks * one for
their wages for services and a “Second Check” for the reimbursement costs
of their tools and equipment.
Because the Tool Reimbursement payments are paid pursuant to an accountable plan
and properly accounted for, you will not be subject to payroll taxes on the amounts
paid as reimbursements.
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* (You have the option of transferring the reimbursement
amounts to your own payroll system for printing on a single check if desired)