Payroll Tips & News

The Pennsylvania Local Services Tax: Small Dollars, Big Confusion

By the ABCS Payroll Team • Payroll Taxes

Of all the taxes we handle, the Local Services Tax generates the most confused phone calls relative to its size. The LST tops out at $52 per employee per year in most municipalities, yet it trips up employers constantly. Here is why.

The LST is owed where the employee works, not where they live. If your shop is in DuBois but you open a second location in Clearfield, the employees at each site owe LST to different municipalities, possibly at different rates. Move an employee between locations mid-year and it gets messier: the tax is typically withheld pro-rata each pay period, and the employee should not pay more than the annual cap in total even if they work in three different boroughs.

Two details employers often miss. First, employees earning under $12,000 a year are exempt in municipalities that levy more than $10, but only if the employee files an upfront exemption certificate. Second, when an employee with another job has already paid the full LST elsewhere, they can claim an exemption with you too. Neither happens automatically; the paperwork has to exist.

Our payroll platform tracks LST by work location and handles the pro-rata math, which is exactly the kind of detail that makes outsourced payroll tax management worth it for multi-location businesses.

Why You Should Actually Read Your Payroll Summary Before the Check Date

By the ABCS Payroll Team • Best Practices

Every payroll we process generates a Payroll Summary Report the same day. We know from experience that plenty of busy owners file it unread. That is a missed opportunity, because the gap between processing day and check date is the one window where a mistake costs nothing to fix.

You do not need to audit every line. Sixty seconds is enough to scan for the things that actually go wrong: an employee whose gross pay looks unusually high or low (usually a typo in hours), someone missing entirely (a new hire whose paperwork did not make it in), or a bonus that was supposed to be in this run and is not. Catch it before the check date and it is a quick correction. Catch it after, and you are dealing with a void, a reissue, and an awkward conversation with an employee who was overpaid or underpaid.

The pattern we see across hundreds of payroll runs: businesses that glance at the summary every cycle almost never need corrections. It is the cheapest insurance in payroll.

Hiring Your First Employee in Pennsylvania: The Five Registrations People Forget

By the ABCS Payroll Team • New Employers

The jump from sole operator to employer is bigger administratively than financially. Before your first payday, Pennsylvania expects several registrations to already exist, and most first-time employers learn about them only when a notice arrives. The usual list:

• Federal EIN from the IRS, even if you already have one as a sole proprietor for banking
• PA employer withholding account with the Department of Revenue for state income tax
• PA unemployment compensation account with the Department of Labor & Industry
• Local EIT and LST registration with your municipality's tax collector (in much of the state, Berkheimer or Keystone Collections)
• New-hire reporting to the Commonwealth within 20 days of the hire

Add workers' compensation insurance, which is mandatory in Pennsylvania from the very first employee, and the to-do list is real. The good news: when a new employer comes to us before that first hire, we set all of this up as part of onboarding. It is far easier to build it right than to untangle it after the first quarter's deadlines have already passed.