The Complete State Of Florida Payroll & Payroll Taxes Guide
Learn exactly how payroll works in the state of Florida and which payroll taxes and laws your Florida business is required to follow.
Blessed with no state or local income taxes, Floridian businesses enjoy one of the laxest tax codes in the country. That leaves them with much less number crunching and heavy lifting to do in their payroll management. And coupled with highly intuitive payroll management software, small and medium scale business owners in Florida can process their payrolls personally with relatively greater ease.
With this guide, we aim to equip you with all the know-how you need to implement and run your payroll management system personally in Florida.
Table of Contents
Federal & State Payroll Taxes In Florida
Not only is Florida an income tax haven, both the state and local governments can side-step other taxes charged in other jurisdictions and on the federal level. However, payroll management in Florida is still fraught with many hurdles in the form of Federal taxes. You need to properly account for FICA taxes, which cover your employees’ Social Security, Medicare, retirement benefits, and other social programs. Basically, you can’t escape some long-winded calculations in your payroll management system in Florida.
But no worries, we’ll make it easy to get your state of Florida payroll taxes right. Here are all the different types of taxes that you need to keep in mind when processing your payroll in Florida. Drill down to see each Florida payroll tax type and learn exactly what your business can expect.
Florida’s Tax Exclusions & Exemptions
Primary residences in Florida enjoy homestead exemptions of up to $50,000, though $25,000 applies only to non-school taxes while the rest are spread across all taxes. Widow/widowers are eligible for Widow(er) Exemptions of $500 provided they were not divorced at the time of their ex-spouse’s death. You’re also totally exempted from property taxes if you have a total or permanent disability.
Certain counties and cities provide Senior Citizen Exemptions of up to $50,000 for residents aged 65 and older with gross incomes below $20,000.
Veterans in Florida enjoy some of the most comprehensive exemption provisos in the country. These include property tax exemptions ranging from $5000 to no property taxes at all depending on factors such as disabilities from service-related events, age, and recent deployment.
Florida’s Labor Laws & Other HR Requirements
Labor laws in effect in Florida cover an exhaustive range of labor-related issues from minimum wage to overtime, breaks, leaves, and severance pay. Florida state and federal laws overlap in some areas, while only one level of legislation applies to some others. Here’s exactly what you need to know about Florida’s payroll and labor laws and how they apply to your business.
How Calculate Payroll Taxes In Florida
Now that you have a firm grasp of the legalities and numbers you need to pay attention to when processing payroll, you’re half-equipped with what you need to know to set up and run your payroll system on your own.
Several factors determine the effectiveness and efficiency of certain tools and functionalities for running a payroll system. However, in the following sections, we’ll show you how to combine the necessary factors to implement and manage your payroll management system in just six easy-to-follow steps. Read on to find out how to take advantage of various payroll tools and resources to implement your payroll on your own seamlessly.
Step 1: Make Sure You’re Following All Florida Payroll & Labor Laws
You can always refer to the first section of this guide to refresh your memory about the existing payroll laws in Florida. Given their relatively lax requirements, it’s easier to comply with Florida’s payroll laws, but you’ll still want to do your due diligence. You can end up paying heavy payroll penalties for failure to comply with any payroll law in the state.
Step 2: Have the Proper Employee Documentation
Once you’ve thoroughly researched payroll laws in Florida, the next step to take towards implementing your payroll system is to collect proper documentation for your employees. These documents will help you determine what to enter in various columns of an employee’s slot in your payroll system. Your employee’s W-4 form will provide you with details that can help you determine the exact amount you need to withhold from their paychecks for state and federal taxes. Your employees are free to change the details in their W-4 forms at any time of the year to reflect recent changes in their lives that are relevant to taxation.
You also need to get an I-9 form for your employees to verify their identity and eligibility to work in the U.S. Your employees need to fill out this form on their first day at work, and you need to fill out the employer’s section within three business days afterward.
If you want to offer direct deposits as an option for distributing paychecks, your employees need to fill out a form to that effect.
Step 3: Calculate Your Employee’s Pay
This is usually the most complex step of the process, but you can simplify things using one of these top payroll software options. You can use a timesheet, attendance systems, or digital time to keep track of your employee’s working hours. When calculating earnings from working hours, you can only apply the regular hourly rate to 40 hours in a week – any extra hours must be counted as overtime, which is 50% more of the normal hourly rate. But besides their working hours, you also need to factor in overtime, tips, commissions, PTO, etc. when calculating your employee’s earnings.
The calculation of a salaried employee’s pay is much more straightforward than that of employees paid hourly. You only need to divide their annual pay by the number of paydays in a calendar year.
Check out our complete guide on how to calculate payroll if you need more help.
Step 4: Deduct Federal & Florida State Payroll Taxes
Next, calculate and deduct any applicable taxes from each employee’s earnings. Here’s a rundown of the most important taxes you need to deduct on behalf of your employees:
- Federal Income Tax: You can calculate what each employee owes in federal income taxes based on the tax withholding tables published in the most recent edition of IRS Publication 15-A.
- FICA: These include Social Security and Medicare. You need to take note of the year-to-date income and the income limits for the deductions.
- Contributions To Savings Accounts: You’re also responsible for sending contributions to various social welfare programs on behalf of your employees, from health insurance to life insurance, 401(k), etc.
- Garnishments: If you receive a notice to garnish your employee’s paycheck, attend to it promptly to avoid legal issues.
- Miscellaneous Deductions: Finally, you need to check properly to ensure that you’ve factored in all the deductions you’re mandated to keep from your employee’s paychecks, including loan repayments for loans from banks and other lending institutions.
Learn more about small business payroll deductions in our complete guide.
Step 5: Process Payroll
After determining all the tax withholdings and net pay, the next thing you need to turn your attention to is the methods for distributing the paychecks. You can choose to process the paycheck manually, tearing out check leaves from a dedicated checkbook and writing out the checks. A faster method is direct deposits, but that requires a one-time setup fee for each employee and a small transaction fee for each deposit.
You can also outsource the paycheck distribution to a professional employment organization (PEO), or use payroll software to completely automate the process.
Step 6: Don’t Forget To Keep Records
Lastly, you need to document and store all your payroll records and make them easy to retrieve when you need to report them to the proper federal and state authorities. Your payroll records should include details like:
- Employee’s full name and Social Security number
- Address, including ZIP code
- Employee’s schedule
- Total hours worked each day
- Type of pay (hourly or salaried)
- Regular pay rate
- Overtime and other earning
- All deductions from their paycheck
- Total monies paid each payday
- Payment dates and the period covered
Learn exactly which payroll records you need to keep and for how long.
State Of Florida Payroll Resources
That’s just about everything you need to know to implement and manage a highly simplified payroll system. It might take you some time and several rounds of processing to gain a full grasp of the entire process and work more quickly.
For more Florida business resources, learn about Florida small business insurance.
For more payroll tips and tricks, check out our best payroll practices for small businesses and best of luck with your payroll processing!