If you operate a Pennsylvania-based business and engage with subcontractors and vendors on a 1099-MISC basis, there is a new requirement from the Commonwealth of Pennsylvania. Effective January 1, 2018, “payors of non-employee compensation or rent to non-resident individuals or their SMLLC’s must withhold Pennsylvania income tax at the rate of 3.07% of their payments.”
What does this mean? For Pennsylvania-based businesses engaging with subcontractors and vendors located outside of Pennsylvania who operate as an individual or an “SMLLC” (single member limited liability company), and to whom your annual payments will total above $5,000, you are responsible for withholding Pennsylvania income tax on their payments at a rate of 3.07%.
Since this is new, penalties for non-withholding have been delayed until the end of the second quarter of 2018. If you are not certain as to whether you will meet the $5,000-plus criteria, the state is recommending you remit the withholdings.
If you have any questions about this or any other topic related to financial or IT services, we are happy to help. Call 215-723-4881 or contact us online.
Adam Girdner joined our Computer Solutions department this past June as a Computer Solutions Technician. Prior to joining Canon Capital, Adam was a network administrator/support system specialist for a local university. Working in IT since 2008, he interned at a communications company while working toward his bachelor’s degree in Computer Information Systems from SUNY Brockport.
Adam lives in Perkasie with his wife and daughter. The family is eagerly anticipating the arrival of a son/little brother in early September. Adam is involved in his church as a group leader for 2nd graders. He enjoys spending time with his family and in his spare time, his favorite hobbies of hunting, hiking, fishing and camping.
Kristi Boehm joined the Payroll/Bookkeeping department of Canon Capital in June 2015. Prior to coming onboard with us, she worked for a local electrical, plumbing and HVAC company.
Kristi lives in Lansdale with her husband and they enjoy travelling. When not at work you’ll find her enjoying the outdoors, including camping and hiking. Kristi’s love of travel extends to her hobby of travel planning, including writing reviews for her own travel website.
If your daily commute involves enduring the Schuylkill Expressway or hopping on Septa Regional Rail to Philadelphia, a city ordinance that took effect in May 2015 applies to you. Although you may live in the suburbs, if you are a full- or part-time employee who works at least 40 hours per year for a Philadelphia business the new “Promoting Healthy Families and Workplaces” ordinance brings you new benefits. What does this mean? Through this legislation, you now accrue one hour of paid sick leave for every 40 hours worked. The maximum for each year is 40 hours.
Most Employers with Less Than 10 Employees May be Exempt from Providing Paid Sick Leave
While this ordinance applies to all employers conducting business within the city of Philadelphia, those with less than 10 employees are required to provide only unpaid sick leave. They are required to do so, however, at the same rate as those businesses providing paid sick leave. The Philadelphia Department of Commerce reports that “certain chain establishments are required to provide paid sick leave regardless of the number of employees at the chain’s Philadelphia location.”
Expansive Coverage But Not All Types of Employees are Eligible
There are a few employment situations where this paid sick leave ordinance will not apply. According to this flyer from the Philadelphia Department of Commerce providing a summary of the legislation, it does not apply to:
- Independent Contractors
- Seasonal Workers
- Adjunct Professors
- Employees hired for a term of less than 6 months
- Pool employees
- Employees covered by collective bargaining agreements
- State and Federal employees
To read the full legislation, click here. We are also happy to guide you through this new ordinance and answer any questions you might have as it relates to your payroll services. Contact us at 215-723-4881 or click here to contact us online.