Where New York payroll actually goes wrong
Most New York payroll penalties come from six rules that have nothing to do with getting the arithmetic right.
Manual workers have to be paid weekly. A 2025 amendment changed the damages for a first violation, not the obligation.
New hire reporting covers independent contractors on contracts over $2,500, which is the requirement employers miss most often.
What managed payroll services cover
Managed payroll services mean an outside firm runs the pay cycle end to end: gross to net, meaning the calculation from an employee's headline salary down to the amount that reaches their account, plus funding, tax deposits, quarterly returns, year end forms, and the employee records behind all of it.
What separates a CPA firm from a payroll platform is where the work stops. A platform files what you tell it to file. It does not tell you when your delivery drivers meet New York’s manual worker test and have to be paid weekly, or that the contractor you engaged last month crossed the threshold that makes them reportable too. Most of the money lost in payroll goes to penalties rather than to fees.
We run managed payroll services for employers with one person on the books and for employers with several hundred, across every state. The pay cycle goes into the same file as your business return, so the numbers reconcile once instead of twice.
This is accounting, tax, and payroll administration. We do not give legal advice on employment matters, and we do not place insurance coverage.
The firm behind the payroll, in five numbers.
12+
years serving New York City
150,000+
returns filed
Serving clients in
all 50 states
5 star
rated on Google, Yelp, and Thumbtack
Open
evenings and weekends
Employers we run payroll for
Who is on the payroll determines how the cycle runs.
Payroll for startups
first hires, founder compensation, equity holders who are also employees, and any state registrations a remote hire triggers.
Professional firms
partners, associates, and staff on different pay bases, with owner draws kept separate from wages.
Payroll for remote employees
one employee in a new state usually means an unemployment insurance account, often a withholding account too, and sometimes a local tax nobody budgeted for.
Trades and field services
crews who meet the manual worker definition and have to be paid weekly under state law.
Nonprofits
payroll where the manual worker rule relaxes to semi-monthly, plus the wage reporting a grantor or funder asks for at year end.
Employers switching providers
companies leaving a platform mid year, where the year to date figures have to survive the move intact.
What the payroll run includes
Every cycle, without you chasing it.
Processing and funding
gross to net calculated, direct deposits released, and federal and state deposits made on your deposit schedule.
Quarterly and annual filings
Form 941, Form 940, and the state equivalents, filed on time rather than filed after the notice.
Employee records management
onboarding paperwork, W-4 and IT-2104, the New York State withholding certificate, direct deposit authorizations, and the retention periods the state expects.
Payroll and benefits administration
deductions, employer contributions, and remittance to carriers, kept in step with what the offer letter promised.
Year end payroll processing
W-2s and 1099s issued, third party sick pay and fringe benefits trued up, and the fourth quarter reconciled before anything is filed.
Reconciliation to the books
payroll posted to the general ledger each cycle, so the wage expense on the return matches the returns you filed all year.
Payroll tax notices
the letter from the IRS or the state answered by the people who filed the return it disputes, rather than forwarded back to you with a ticket number.
Garnishments and income executions
child support orders, tax levies, and creditor executions set up, capped at the legal limits, and remitted on schedule.
Free consultation
How many states do you employ in?
Tell us your headcount, the states you employ in, and what you run payroll on today. We will scope it and quote before any work starts.
The six New York payroll rules that produce most penalties
Most payroll penalties in New York come from six rules that have nothing to do with getting the math right.
Quarterly returns
Everything runs through Form NYS-45, the combined withholding, wage reporting, and unemployment return, due the last day of the month after each quarter. It is required even in a quarter with no payroll, there are no extensions of time to file or pay, and electronic filing has been mandatory since March 2025.
New hire reporting
You report a new hire within 20 calendar days. Since 2022 that has included independent contractors on contracts over $2,500, which employers miss most often because engaging a contractor does not feel like a hiring event.
Pay frequency
Under Labor Law 191 a manual worker, broadly someone doing mostly physical labor, has to be paid weekly, within seven days of the week ending. A 2025 amendment cut liquidated damages for a first violation where the employer paid at least semi-monthly on a regular payday, and a second finding restores them in full.
The wage notice
Labor Law 195 requires a written pay rate notice at hiring, in English and in the employee’s primary language where the state publishes a template in it. It also sets what every pay stub has to show.
Disability and paid family leave premiums
These go to your carrier on its own billing cycle rather than to the state. They fall outside the quarterly cycle, which is why employers miss them.
The MTA payroll tax
Employers whose payroll expense clears the metropolitan commuter transportation district threshold file this separately. It runs on the same schedule as the NYS-45.
Payroll compliance services exist because none of this appears on a platform’s dashboard.
Worker classification and the control test
Classification is decided by the working relationship, not by the contract or the invoice.
Agencies look at control. Who sets the hours, who supplies the tools, who carries the risk of loss, whether the work is integral to the business, and whether the arrangement looks permanent. A signed contractor agreement does not outweigh those facts.
A reclassification produces more than one bill. It produces back withholding, the employer share of FICA, unemployment contributions, interest, and penalties, usually across every open year and every worker in the same role at once. New York also tests classification through unemployment insurance audits, which move faster than a federal examination and which most employers encounter first.
A second obligation applies even where the classification is correct. Any independent contractor engagement worth $800 or more, on its own or added to other contracts with the same person over the preceding 120 days, requires a written contract.
We review classifications before the audit does, and we document the reasoning while the facts are still fresh. The safest time to fix a classification is before the first invoice, not after the second year.
Benefits administration, HR compliance, and ACA reporting
The administration that runs alongside the pay run.
HR compliance outsourcing
handbooks, offer letters, and onboarding packets kept current with what the state requires at hiring.
Benefits administration
enrollment, deductions, and carrier remittance for health, dental, disability, and paid family leave.
ACA reporting
applicable large employer status under the Affordable Care Act, tested on the prior year's full time and equivalent count, and Forms 1094-C and 1095-C produced when that count reaches 50 or more.
Workers compensation and disability
policy administration, payroll reporting to the carrier, and the audit reconciliation at renewal.
Terminations and final pay
final wages timed to the rules, plus the notices the state requires on separation.
How to switch payroll providers without breaking year to date
Six steps and a start date. The order matters more than the timing.
- 01
Scope call
Headcount, states, pay bases, and what you run payroll on today.
- 02
Data pull
Year to date wages, taxes, and deductions per employee, exported before you lose portal access.
- 03
Account transfer
Withholding and unemployment accounts moved or opened, with any missing state registrations filed.
- 04
Parallel run
One cycle checked against your existing output before anything goes live.
- 05
Cutover
Ideally at a quarter boundary, so no quarterly return is split across two providers.
- 06
First filing
We file the first quarter under the new setup and reconcile it back to your books.
Where the move includes a new platform, the payroll software implementation runs alongside steps 3 and 4 rather than after them.
What managed payroll services cost
Priced on how the payroll is built, not per payslip alone. What we quote against:
- 1Headcount, and how much of it is hourly rather than salaried.
- 2Number of states you employ in, since each one can add registrations and returns.
- 3Pay frequency, because weekly doubles the cycles of a biweekly employer.
- 4Whether benefits, workers compensation, and ACA reporting are in scope.
- 5Whether we are taking over a clean payroll or cleaning one up first.
These are the factors, not a quote. Multi state payroll services are scoped and priced before any work starts.
What our clients say
“This is one of the biggest complaints that we see in professional services: people hire an accountant and that accountant is thereafter unreachable over the phone or over email.”
“Dimov Tax has been handling our personal and business taxes for the past several years. They also handle our bookkeeping and payroll work... They have helped us manage our growth from a solo practice to a boutique law firm.”
Related services
This page is general information, not advice for your circumstances. Because payroll obligations turn on facts specific to your workforce, speak to a CPA before acting on anything here.
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Hand payroll to a CPA firm
Tell us your headcount, the states you employ in, and what you run payroll on today. We will scope it and quote before any work starts.
