Finance

Why Should You Understand Kentucky Payroll Laws?

36Views

Ensuring you’re compliant with Kentucky payroll laws is essential for your business. As a contractor, understanding what is required of you by the state means you can avoid costly penalties and are less likely to face an audit.

Kentucky law requires that companies pay all their employees (excluding family members) no later than the regular payday for the pay period they worked. This means that if the employee is salaried, they must be paid according to a salary schedule or within 15 days of the end of each month, whichever comes first. If you are running an S-Corporation, LLC, partnership, etc., your employees are considered “shareholders,” “members,” or partners. Therefore Kentucky laws state that these individuals must be paid on the last day of January, April, July, and October.

Employers must withhold 7 percent from all taxable wages being paid out to any employees who are residents of Kentucky regardless of whether it is for services performed inside or outside this state. All non-resident employees who are paid in Kentucky must withhold income tax at the rate of 7 percent for all taxable wages that originate in this state.