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Payroll Sales Pro Issue #30: Answers to Most Prospect’s Questions--Part 1 Taxes and Compliance
August 31, 2016

August 31, 2016

This small body of knowledge about how payroll works and the common terms you will encounter will answer the vast majority of your prospective clients questions. Armed with this information, you will be able to successfully sell payroll.

”You will either step forward into growth, or you will step backward into safety” – Abraham Maslow

Answers to Most Prospect’s Questions--Part 1 Taxes and Compliance

Learning all about payroll can seem daunting if you are new to the field and are trying to introduce it as an “add-on” product to your current clients. Getting the basics of how to introduce payroll (a potentially lower price and a dedicated customer service rep who knows them and their business) is one thing to master, but…

What about when the clients start asking questions, then what?

First of all, there is no shame in telling them you need to check and get back to them; however, there is a small body of knowledge that can answer the majority of the questions most prospective clients have:

What are the most common Payroll Frequencies? Payroll frequency refers to how often employees are paid. The typical payroll frequencies are weekly, biweekly, semi-monthly and monthly. Depending on the state, most hourly employees are required to be paid either weekly, bi-weekly, or semi-monthly. Monthly payrolls are generally reserved for salaried employees.

Will you file my taxes?PayPros will file the following: FUTA, Social Security, and Medicare (see below for definitions). These will be compiled in a form called 941, which will be filed each quarter with the federal government.

The State version of the 941 is where the SUI and SUTA are filed. This is typically called the State 941, however, a few states have their own numbered form, which is essentially a 941 equivalent. Occasionally there are some county or municipality taxes (notably Pennsylvania and New York); rest assured that whatever taxes are levied, PayPros will collect and file them with the appropriate authorities.

What is FUTA: Federal Unemployment Tax Act is a payroll or employment tax paid solely by the employer. While the FUTA tax is paid by the employer, it is based on each employee's wages or salary. Generally, the FUTA tax ends up being 0.6% of the first $7,000 per year of each employee's wages or salary.

What is SUTA? State Unemployment Tax Act. The State tax rate at which you pay unemployment insurance to the state. The SUI rate is the rate at which you pay that tax (see below.)

SUI or SUI Rate: This stands for the State Unemployment Insurance Fund tax rate, which is the rate at which the SUTA is paid. Prospects may ask about this if they have a new business and need to be set up. This is one of the taxes that will be taken out by the payroll company. This is a fund a company will pay into at a specific rate. That rate is determined by whether or not the company has high employee turnover; if they have high employee turnover they will have a higher rate since their employees are more likely to draw on the unemployment fund, whereas a company with low turnover will have a lower rate.

What is a Federal ID, State ID, and/or a SUI ID? The Fed ID is the number the IRS assigns a company when it is formed. If someone has been running payroll already, you can find it on a recent 941. If they have never run payroll but have a Fed ID, ask for the letter from the IRS that is sent when a company is formed, which should have the Legal name of the company, the Fed ID, and the Address of Record, which is the address the IRS has on record.

The State ID is issued once you have applied for and received a Fed ID. This is the ID number under which the SUTA is filed.

The SUI ID: some states have a separate state unemployment insurance ID under which the 941 should be filed, but most states have only a State ID which covers both.

What is a 940? Both state & federal 941’s are filed quarterly. The 940 is the annualized version of those four reports. The typical Form 941 and 940 tax payment includes the following components: Federal income (withheld from employee) Social Security (withheld from employee) Social Security (paid by employer).

Every time payroll is processed, a portion of each of the taxes that will be due quarterly will be taken out, along with the money to fund the payroll and PayPros fees. This helps with cash flow, because instead of taking a large amount of money at the end of each quarter, it is evenly distributed throughout the quarter. Then, at the appropriate due dates, that tax money and form is sent to the various agencies to which it is due.

Learning this information, and then keeping it nearby for easy reference, will enable you to successfully answer the majority of questions your prospective clients will have. In the next issue we will answer a few more questions you are likely to encounter.


All it takes to refer payroll is to obtain a payroll invoice from the client, then send it to us and we’ll take it from there. When the client signs up with payroll, you get paid a residual commission for the life of the client.

Remember, PayPros can typically save them 20-25% over what they are currently paying and they will get a dedicated customer service rep that really knows them and the ins and outs of their business.

Ask them for a current invoice, send it to us, and when it closes you get residual commission for the life of the client.

For more detailed payroll Talking Points tips and information, see Payroll Tips and Techniques


Think you’re ready to earn Residual Commission for the life of your clients as a Payroll Referral Rep? Contact us by calling (888) 693-4611 or filling out the form at Best Business Payroll--How to Make Residual Commission

We’ll be glad to answer any questions you may have and look forward to helping you become successful in any way we can.


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