Setting up payroll as an S Corporation – Heard

Overview

This document explains why an S-Corp needs to set up payroll (even if you are the owner and have no other employees) and walks you through how to ensure you've satisfied your payroll requirements if you are an S-Corp.

Why do I need to set up payroll?

As an S-Corp, you are still the owner, but you are first and foremost an employee of the business and must be set up on payroll to pay yourself a reasonable salary.

How can I ensure that I comply with all the necessary requirements?

Please review our Payroll Compliance Checklists for steps you’ll need to take to ensure you are compliant with federal and state requirements. By following these steps and providing the necessary information, you can ensure compliance with all required payroll regulations.

Here are the key compliance requirements:

Run payroll within the calendar year
Set a reasonable salary
Provide health insurance (if applicable)
Pay payroll taxes (both federal and state)
- Specify the amount of federal payroll taxes
- Specify the amount of state payroll taxes
Complete state registration
- If applicable, provide a list of the states where registration has been completed.

By following these steps and providing the necessary information, you can ensure compliance with all required payroll regulations.

We've created a series of articles to help you with these requirements as well as other best practices:

What are the implications if I haven't run payroll?

If you realize you haven't run payroll before the end of the calendar year and are obligated to do so, there may still be enough time to run payroll. Between the time you elected your S-Corp status and now, it is possible you may receive notices about missing wage reports. In that case, it would simply mean working with the state revenue service and the IRS to file $0 returns for those periods, since payroll was not run for those periods.

Going forward, it’s important to ensure payroll is set up and running so the payroll provider can prepare and submit these filings on your behalf. It is important to take immediate action to prevent any fines, penalties, and interest charges from the IRS when you file your annual tax return.

How do I set up payroll if I haven’t already?

If you haven’t set up payroll for your practice, click here to access Heard Payroll. Feel free to refer to this article for more information on how to set up Payroll for your practice.

You can also choose to set up with another payroll provider.

What if I already have payroll set up?

Your next steps for ensuring compliance depend on the payroll service you use.

I use Gusto or Heard Payroll

Great! To ensure compliance and help manage potential risks, we need visibility, so please add our team as an admin on your Gusto account. By doing so, we'll be able to review your Payroll account to identify any high-risk issues before the end of the year, preventing potential payroll notices that could result from not resolving them sooner. After reviewing your account, we'll reach out to you to confirm next steps and resolve any issues.

If you have not done so already, here are instructions to get you started on changing administrator permissions so the Heard team will be a FULL Admin on your Gusto account: Manage administrator permissions.

Once you're in Gusto editing our access, here's the information you'll need to submit:

First Name: Heard
Last Name: Payroll
Email: payroll@joinheard.com

I use an external payroll provider (not Gusto or Heard Payroll)

The Heard payroll team is proficient with Gusto but may not have experience with other payroll platforms. Unfortunately, we are unable to be added as an admin/accountant to your payroll processor and provide the same level of support that we do with Gusto. Therefore, you would need to rely on your payroll processor for support to ensure compliance.

If you are taxed as an S Corp, our payroll and accounting team can assist you in calculating your reasonable salary and provide ongoing analysis. However, please be aware that our team will be unable to provide additional payroll support unless you switch to Heard's payroll solution. It is important to note that you will be responsible for running your payroll each period for security reasons. Many customers opt to set up auto-pay, which requires no action every pay period. However, it is recommended to verify with your payroll provider, as each software operates differently.

One of the major advantages of using Heard Payroll is the ability to manage all your bookkeeping, accounting, taxes, and payroll within a single login! Our payroll team will offer hands-on support throughout the year and will be available to answer any questions you may have regarding payroll.

How can I ensure Heard has all the documents needed for tax season?

Please take a moment to ensure that the following compliance documents are uploaded to your Heard account. If you have not already done so, please upload these documents as soon as possible.

CP261 Notice: S Corporation approval letter from the IRS
Form 2553: S Corporation election
CP575: EIN letter from the IRS

If you are unable to find any of the required documents, feel free to contact the IRS at 1-800-829-4933. When contacting them, please ensure that you have your Employer Identification Number (EIN) handy. You can expect to receive these documents by mail within a specific timeframe after making your request.