Company Tax
How do I manage my company's tax information in BambooHR?
Purpose: Payroll requires federal and state tax information. This help guide will show you how to manage your tax information within BambooHR.
Please note that you are responsible for verifying that tax IDs, pay frequencies, and rates are correct.
Did you know we have a BambooHR Learning course about company taxes in BambooHR? Click here to learn more about what is included in this course.
Taxes in Settings
Go to Payroll in Settings and select Taxes.
On this page, you can add, search, and filter your company taxes. Tax ID, tax rates, and pay frequencies are assigned to companies by the IRS and states. Enter federal and state tax IDs here to process.
By default, the table shows active taxes. By adjusting the filter, you can see all taxes that includes active, ended, and voided taxes. If you have multiple Employee Identification Numbers (EINs), taxes will display below the applicable EIN.
Company Tax Settings
A gear dropdown menu will appear in the right corner of the Taxes page in Payroll Settings. Clicking that gear, then selecting Company Tax Settings will pop up a modal where you can adjust the following company-level tax settings for both state and federal taxes:
State:
1. Ohio Courtesy Withholdings: If your company is subject to payroll taxes in the state of Ohio, BambooHR will collect and report local courtesy withholdings from employees each pay period by default. If you choose not to support the courtesy withholdings for employees, you may suppress this by selecting No, do not collect Ohio courtesy tax based on employees location.
Federal:
2. Display Employer-sponsored health coverage (Box 12DD) on W-2s: By default, the option Show employer-sponsored health coverage on W2s will be selected. You have the option to choose if you want BambooHR to report the employer-sponsored health coverage amounts on your employee's W-2 if you have less than 250 employees. If you have more than 250 employees, you will not have the option to hide this amount as it is federal tax law to report these on the W-2 with that many employees.
3. How will you file for contractors?: If you are a BambooHR Payroll customer and have contractors, you can select whether you would like BambooHR to print and mail your contractors their 1099s on your behalf. By default, the I will file, print, and mail my own 1099 option will be chosen, as BambooHR charges a small fee for this service.
Changes made to W-2s or 1099s will be applied the following year. For example, if you opt-in to have BambooHR print and mail your 1099s in January of 2024, this will take effect in 2025. These settings will not retroactively apply to the 2023 1099s. If you would like to adjust these settings for the previous year, please contact our Payroll Support team.
Click Add Tax from the company tax page. On this page, you will fill out the following information:
- Effective Date: This is the date that payroll will first use the new tax. The Effective Date drop-down list only allows you to select quarter start dates. Only future quarters will appear, so you can pick any quarter up to a year in advance for your tax to start.
- State and Tax Type: When selecting a state, the Tax Type drop-down list will change to only display taxes applicable to the state you selected.
- Do you have a Tax Account ID?: If you select "No", a link to the state's tax registration website will appear with some info on what you will need handy to quickly apply for the ID. You can also check that you have already applied and are waiting for the ID.
- Tax Account ID: State tax IDs must apply to the state where the tax is owed. If you add a tax and are waiting for a tax ID, a modal will appear when you click Save, informing you of when you need to enter a tax ID before receiving a fine*.
- Tax Account ID help icon: If you need help finding the right tax ID number or figuring out how to format your tax ID, click on the help icon. We will tell you which formats are acceptable for that specific tax so you know what to look for.
- Tax Deposit Frequency: The selected tax type will change the options in the tax deposit frequency drop-down list. In the case of some taxes, you cannot change the pay frequency because the specific tax only allows one pay frequency.
- Tax Rate - Tax rates are related to unemployment taxes. A New Employer tax rate is entered for unemployment tax until a rate is assigned. Click here to find the New Employer tax rate for your state. Keep in mind, when entering a tax for State Unemployment Insurance, the tax rate field has a minimum and maximum amount that you can enter. BambooHR will limit both the minimum and maximum tax rates that you can enter.
- Notes: This section is available for the convenience of tracking additional information.
If you have multiple EINs, there will also be a Company/EIN field that allows you to specify which EIN the tax will add to.
*Please note that fees apply if the tax ID has not been entered within 60 days. A $100 fee will apply for each state missing a Tax ID 60 days after the first payroll run and every 60 days afterward until the tax ID has been entered into BambooHR. A reminder notification will send weekly as a reminder to follow up and get this information entered.
Check out this help guide to get help with finding your company tax information.
If you receive a new tax rate notice from a state you're registered in, you will need to update the tax information in BambooHR to reflect the changes. Keeping your state taxes up to date in BambooHR ensures that taxes are filed and paid timely. If an unemployment rate has changed, end the existing record and add a new one with the effective date of the change. Likewise, if you create a new tax by mistake, you can remove that tax to no longer appear.
To update tax information, hover over the tax you want to change and click on the gear icon on the right. Then, select the applicable option from the list.
If you need to make changes to a federal tax, you must reach out to our Tax Admin team to process this request. Don't worry, we've made it easy. Click on the gear icon next to the federal tax and fill out the modal to get in contact.
Keep in mind you are responsible for providing the correct tax frequency and failure to do so may result in penalty. For more information on how to determine your correct federal deposit frequency, click here!
Click on the gear icon for which individual tax you need to enter a new rate and select Add New Rate. The Add New Rate page only allows you to edit the effective date, pay frequency, and tax rate.
If you are no longer required to pay taxes in a state, you must use the End on option to end the tax. This option allows you to pick a quarter when the tax is no longer in use. You should keep the tax active through the end of the year to allow for year-end reporting/filing. You can also remove the End on date if there is no future rate added. The option will only display for taxes with the most future date to prevent overlapping dates from being selected when adding a future date.
You can edit the tax rate anytime during the first quarter that a tax is effective. After the first quarter, you cannot edit the tax rate, and you should add a new rate instead of editing the existing rate.
If you have received a tax ID that you have been waiting for and need to add the ID to a tax, you can use the Edit feature to add the ID and save it.
When setting up your company taxes, the setup of a tax may be incorrect. The Remove option is available for such cases when you need to remove a tax altogether. If a tax type has not been used in a payroll run and removed, the tax no longer displays in the list of active or inactive taxes. If it has been used in payroll and removed, the tax marks as void.
When a Tax ID is missing, an alert will appear in the Taxes section within Payroll Settings as well as on the Payroll Tab. This is a courtesy alert to remind you to complete your tax setup before a late fee is issued after 60 days. The alert will display for 97 days, and if the tax IDs are not updated by then, you will need to reach out to Payroll Support before processing your payroll.
You will need to register and add any new state tax accounts to BambooHR when hiring an employee working in a state your company currently doesn't operate in. This is common for those hiring remote workers.
A failure to add new state tax accounts that apply to your employees could result in not being able to run payroll.
A red banner for each required tax will display on the Taxes page within Payroll settings. Click Setup Now to add the tax account.
A modal will display, and upon selecting the effective date, the State and Tax Type fields will pre-populate. Be sure to choose an effective date that aligns with the quarter of the employee's first pay date.
While our tax engine supports a jurisdiction of over 7,400 taxes, there are a few that we are unable to support. Please work with your accounting team to ensure these taxes are paid. These include:
- Hawaii State Disability Tax paid by the employee
- New Jersey State Disability Income Tax paid by the employee
- New York New Jersey Waterfront Income Tax
- Nevada-Modified Business (General Business) paid by the employer
- New York Employer Compensation Expense Tax (ECET)
- Ohio (Multiple) Joint Economic Development [District/Zone]
- Seattle Payroll Expense
- Vermont - Employer Health Insurance paid by the employer
- Workers Compensation in any state except for WA-L&I (see below).
We do withhold New York State Disability Insurance and New York Family Leave Insurance taxes. However, we do not remit those taxes to the state agency. BambooHR Payroll will withhold those taxes from the applicable employees, and that amount will go back into your company bank account for you to remit independently.
Workers' Compensation for those operating in the state of Washington will be managed in the Company Tax section of Payroll Settings. Click here for further instructions. All other states that include Workers' Compensation will be managed in the Workers Compensation section of Payroll Settings.