How to Do Payroll in Oklahoma

Payroll is a legal term that means the payment of an employee’s wages. This process generally includes calculations of hours, taxes withheld, and other deductions taken by employers or government agencies in order to ensure that all income received by the employee is taxed properly. To comply with state laws for payroll practices, companies must be able to track payments made at any time throughout the year so they can document their compliance status each quarter during tax filings.

Payroll in Oklahoma entails more than just paying workers. You must also submit state Taxes on income and Taxes on Unemployment Insurance in addition to federal taxes. Some workers, such as military spouses, are exempt, and the state has its own W-4 form (the paperwork you’ll have new employees fill out upon employment) with different withholdings than the federal W-4 form.

Payroll Processing in Oklahoma: Step-by-Step Instructions

Payroll in Oklahoma requires a few more processes and paperwork. The following are the fundamentals of federal and state compliance.

Step 1:

Register your company with the IRS as an employer. An EIN and an account with the Electronic Federal Tax Payment System are required.

Step 2:

Register your company with Oklahoma and maintain it up to date, such as if your location or ownership structure changes.
Complete the WHT10006 and submit it to OKTAP.
To pay unemployment insurance, create an account with EZ Tax Express.
To get an Oklahoma Unemployment Insurance Tax Account Number, fill out an OES-1 form.

Step 3:

Create a payroll system. Employers in Oklahoma are required by law to pay salaries at least twice a month.

Collect employee payroll paperwork in step four. When onboarding new workers, do this and remind staff to keep you updated on any major life events, such as marriage or the birth of a kid. The state W-4 form, as well as the federal equivalent, I-9, and Direct Deposit information, are all included. Fill out the form OW-11 if you have non-resident workers who wish to be excluded from tax withholdings. If you have a military spouse on staff, they may wish to complete the OW-9 to avoid withholdings.

Step 5:

Collect, evaluate, and approve timesheets. You may have workers log their work hours using a timesheet or a time clock to keep track of time effectively.

Step 6:

Work out your payroll and pay your staff. Determine how much you need to withhold for Taxes on income per employee using the employee W-4 form and the Oklahoma Tax Tables available online.

Mileage and expenditure reimbursements are not considered pay.

Step 7:

Submit payroll tax returns to the federal and state agencies. For federal taxes, including unemployment, follow the IRS’s guidelines.

File online with OKTAP for Oklahoma income tax withholdings. Some payroll software companies provide free payroll tax calculators or include them as part of their package. When calculating, be sure to utilize the state’s W-4 form.
Each quarter, you must record the number of workers employed, the wages paid, and the sales tax deducted from wages in Oklahoma. Follow the instructions below to remit withholdings.

If you withheld more than $5,000 in taxes per month on average in the preceding fiscal year, you must remit electronically.

Step 8:

Keep track of your payroll data. It’s crucial to retain records for all workers, even those who have been fired, for many years. More information about keeping payroll records may be found in this article.

Step 9:

Complete your year-end payroll tax returns. These include federal Forms W-2 (for workers) and 1099 (for non-employees) (for contractors). These must be obtained by employees and contractors by January 31 of the following year. You must also submit your W-2/W-3 and 1099 forms to the state through OKTAP. The deadline for W-2/W-3 forms is January 31, while the deadline for 1099 forms is March 31.

Payroll Laws, Taxes, and Regulations in Oklahoma

Payroll in Oklahoma isn’t that difficult compared to the bulk of other states. Although you must withhold and pay taxes on income and submit Taxes on Unemployment Insurance, the majority of the restrictions are aligned with federal laws, making it less likely that you will be confused by contradictory requirements.

Payroll Taxes in Oklahoma

The only state payroll taxes that employers must pay out of pocket in Oklahoma are state unemployment taxes (SUTA). Although Social Security and Medicare (FICA) are unavoidable, they are federal taxes that all businesses, regardless of state, must pay. Because Oklahoma has a state income tax but no local or municipal taxes, you’ll need to set up a mechanism to withhold them from your workers’ paychecks and submit them to the appropriate tax agency.

Taxes on Unemployment Insurance

Oklahoma charges Taxes on Unemployment Insurance on income up to $24,000 per year. The 2021 rate is 1.5% and changes each January.

What If I Told You

When you pay SUTA, you may qualify for a discount on your federal Taxes on Unemployment Insurance (FUTA)—up to 5.4% on a 6% tax. This can greatly reduce what you owe the IRS.

Taxes on income

To determine how much you need to withhold in state Taxes on income from each employee’s paycheck, print and have each new hire complete Form OK-W-4. To determine federal income tax withholding amounts, use Federal Form W-4.

In general, income tax withholdings are required for all Oklahoma workers, with the following exceptions:

Farmworkers with a monthly wage of less than $900
Workers at the home
Unless the payment is above $200 in a calendar quarter, payments for services not performed in the course of the employer’s trade or business.
Non-residents with an annual income of less than $300 in any calendar quarter
Clergy

Unless you are an LLC or S-corp and your employee requests an exemption, you must withhold state taxes from non-resident workers. If your firm has less than 100 employees, you are immediately eligible for an exemption.

Withholdings must be submitted quarterly, but if you pay more than $500 in payroll every quarter, withholdings must be filed monthly. These must be submitted by the 20th of the month after the payment month.

Oklahoma levies late fines of ten percent of the tax owed, or ten percent of the tax owed if it is underpaid. It is deemed delinquent if it is not paid within 15 days of the due date. On any outstanding sums, the state additionally imposes interest at a rate of 1.25 percent each month.

Taxes on Employers

You must pay federal FICA taxes and withhold a corresponding amount from your workers’ paychecks for Social Security and Medicare. Both you and your workers will contribute 6.2 percent of their wages to Social Security and 1.45 percent of their earnings to Medicare.

Minimum Wage

Oklahoma sets its Wage Minimum at $7.25 an hour, which mirrors federal regulations. You’re required to adhere to this regulation if you have a business in Oklahoma with at least 10 employees and/or gross more than $100,000 in a year, and/or are involved in doing business between states. Exemptions include those covered under the federal Fair Labor Standards Act (FLSA) and the following:

Those with executive, administrative, or professional responsibilities
Salespeople that work outside the company
Farmworkers
Employees of any carrier covered by the Interstate Commerce Act’s Part I
Students under the age of 22
Workers under the age of 18 who are neither vocational or high school graduates
Employees that work fewer than 25 hours per week and are not on a permanent basis.

If you pay tipped employees, employees who receive at least $20 in tips monthly, you are eligible to pay them a tipped Wage Minimum; this will only work if their tips boost their total pay to align with Wage Minimum regulations. The maximum tip credit you can apply against the Wage Minimum is $5.12 per hour. Employers must pay tipped employees at least $2.13 per hour and should apply tip earnings toward the balance of the Wage Minimum obligation.

Overtime

There are no overtime laws in Oklahoma. However, you are still subject to federal wage and hour rules, which require non-exempt workers to be paid 1.5 times their usual hourly salary for any hours worked in excess of 40 in a seven-day workweek.

If you have workers who will be working overtime at some point, read our article on how to calculate overtime to make sure you pay them and the IRS the right amount.

Employees Can Be Paid in a Variety of Ways

Employees may be paid electronically (through direct deposit or pay card, if the employee agrees), by cheque, or in cash in Oklahoma. If you want to pay your employees online, they must be able to obtain their whole salary without any deductions for withdrawals. So, for example, if a pay card deducts a percentage of each transaction from their paychecks—PayPal, for example—you cannot pay by pay card.

Pay Stub Laws in Oklahoma

Although the federal government does not control pay stubs, most states do. Oklahoma is classified as an Access State, which simply implies that firms must furnish workers with itemized pay summaries. This doesn’t have to be printed or delivered with paper checks; it may be filled out online, for example, via an HR or payroll site, or even by email.

Minimum Pay Period

Employees must be paid at least twice a month on regular paydays that you select in advance. The time between the conclusion of the work period and the normal paycheck cannot exceed 11 days.

Pay on time: An employer may be fined up to 2% liquidated damages every day that wages are not paid on time, up to the amount owing to the employee. Contractors are included in this.

Payroll Deduction Regulations

FICA, federal or state income tax, SUTA, and garnishments are all examples of deductions. Other deductions, which must be agreed to in writing, include the following:

Premiums for insurance
Deductions for repaying wage advances
Expenses for uniforms are reimbursed.
Employee contribution to perks such as health insurance
Employer-provided deferred compensation programs or investments for employees
Employee-caused damage, loss of product, inventory shortages, or cash shortages are compensated.

Oklahoma’s Final Paycheck Laws

If an employee departs for whatever reason, you must pay them their last earnings by the following normal payday, unless the person requests certified mail. This is more convenient than states that demand a same-day turnaround or adjust expectations depending on whether an employee quits or is fired.

If an employee dies, you must pay the surviving spouse or children all of the person’s income and benefits, up to $3,000.

HR Laws in Oklahoma That Affect Payroll

Many of Oklahoma’s human resources and labor legislation are modeled after federal rules. There are certain precise restrictions that limit how long minors may labor and be paid, but they aren’t difficult to understand. Furthermore, although some states have laws mandating it, there is no necessity to give Disability Insurance Provided by the State.

New Hire Reporting in Oklahoma

If reporting by mail or fax, all newly employed workers must be reported to the Oklahoma Employment Security Commission (OESC) within 20 days after hiring. Employers who report electronically must do so at least twice a month and within 20 days of hiring a new employee. Use the first day the employee provides services for a salary as the start date.

The OESC recommends that you file electronically, but if that isn’t feasible, you may transmit the information by downloading the form and sending it to the OESC.

Lunches and Breaks

Only minors under the age of 16 are required to take breaks in Oklahoma, and federal law has equivalent rules. In the end, how meals and break periods are handled is a matter of business policy. The State of Oklahoma will enforce any standard break procedures you establish in your employee handbook, so be sure you follow them.

Sick Leave and Vacation

Employers are not compelled to give paid or unpaid PTO, such as sick leave or holidays, to their employees. However, if you establish a policy, you must follow it.

Paid Parental Leave

Paid Parental Leave laws closely mimic federal law in the Family and Medical Leave Act (FMLA) and apply to businesses that have had 50 or more employees for at least 20 weeks in the current or previous year. Employees can take FMLA leave if they:

Have at least a year of experience with the firm
In the previous year, I worked 1,250 hours, and
Work in a 75-mile radius in a company with at least 50 workers.

In a 12-month period, qualified personnel may take up to 12 weeks to:

Make a connection with a youngster (newborn, adopted, or fostered)
Recover from a significant health problem.
Taking care of a family member who is suffering from a terrible illness
Handle any family crises that arise as a result of a family member’s military duty.

Employees may take up to 26 weeks of leave to care for a family member who was seriously injured while serving in the military on active service. This is a per-injury, per-service-member entitlement, therefore they can’t take 26 weeks for one injury one year and 26 weeks the next.

While you are not required to pay wages while on FMLA leave, you must maintain your health insurance coverage. Employees may use their earned vacation time while on FMLA leave.

Leave for Maternity

Oklahoma does not have specific Leave for Maternity laws, but incapacities due to pregnancy are covered under Paid Parental Leave. This includes severe morning sickness.

Disability Insurance Provided by the State

Oklahoma does not require Disability Insurance Provided by the State. However, providing such a policy makes you a more attractive employer to potential applicants and protects you and your employees.

Laws Concerning Child Labor

The minimum age for employment is 14, and Laws Concerning Child Labor apply to children up to 16 years old. Children can work up to three hours on school days and eight hours on non-school days, up to 18 hours in a school week, or 40 hours in a non-school week. They earn Wage Minimum and vacation like other workers, but also receive an hour lunch break every eight hours or a 30-minute lunch break every five hours.

Forms for Payroll

When learning how to make payroll in Oklahoma, you’ll see that there are several documents to fill out, but not all of them are required, and the most are self-explanatory. The ones that are most likely to have an impact on the payroll are listed below.

How-to-Do-Payroll-in-Oklahoma

Oklahoma offers a variety of forms for various types of withholding circumstances.

Form W-4 in Oklahoma

Employees in Oklahoma must complete a W-4 form. This enables them to claim different withholdings for state taxes vs federal taxes. In 2018, this was implemented in response to changes in federal tax brackets. This form must be completed by all employees.

Other Withholding Forms in Oklahoma

If you’ve paid salaries to an out-of-state attorney, file Form OW-9-D, Out-of-State Attorneys Oklahoma Withholding Tax Report.
If you have workers who claim exemption under the Servicemembers Civil Relief Act, fill out the OW-9-MSE, Annual Withholding Tax Exemption Certification For Military Spouse.
Nonresident Oklahoma Distributed Income Withholding Tax Penalty and Interest Worksheet (OW-9-P): For nonresident members who are obligated to pay interest and did not pay anticipated withholdings under certain circumstances.
OW-11, Nonresident Members’ Registration for Oklahoma Withholding
Nonresident Member Withholding Exemption Affidavit (OW-15): If you have nonresident workers in your LLC or S-corp, you may utilize this form to have them seek exemptions from Oklahoma income tax withholding. You only need to do this if your firm has more than 100 employees.
Oklahoma, WTH10001 Quarterly Wage Withholding Tax Return (Quarterly Wage Withholding Tax Return): Calculate the quarterly withholdings and insert them into the payment coupon using this formula. Each month’s payment is due on the 20th of the month.
Oklahoma, WTH10004 Payment Coupons withheld from payors that do not pay via EFT: If you don’t pay online, add withholdings in your monthly installments.
Oklahoma, WTP10005. Estimated Withholding Tax Report for Nonresident Distributed Income: If you make distributions to non-residents, you must submit this quarterly, according to the fiscal year’s schedule.
Online Oklahoma Wage Withholding Tax Application (WTH10006): This form must be completed by any firm that is subject to tax withholdings.
OES-1, Application for a UI Tax Account Number in Oklahoma: This is what you’ll need to file your unemployment taxes. Complete, sign, and send it to the Oklahoma Employment Security Commission.

Federal Forms for Payroll

Here’s a list of general Forms for Payroll most small businesses need.

W-4 Form: Used by businesses to figure out how much tax to withhold from employees’ paychecks.
W-2 Form: This form is used to record total yearly earnings (one per employee)
W-3 Form: This form is used to record all workers’ total earnings and taxes.
Form 940; is used to submit and compute unpaid unemployment taxes to the Internal Revenue Service (IRS).
Form 941: To submit quarterly income and FICA taxes deducted from paychecks, use Form 941.
Form 944: To report yearly income and FICA taxes deducted from paychecks, use Form 944.
1099 Forms: Used to report non-employee compensation and assist the IRS in collecting taxes on contract labor.

Payroll Tax Resources/Sources in Oklahoma

Oklahoma New Business Tax Seminars: Despite the name, these workshops are for any company that wants to stay up to date on the current tax developments. You may download a copy of the workshop; owing to COVID-19, they are no longer available in person. The online video focuses mostly on sales tax legislation; jump to 23:00 for payroll tax information.
Website of the Oklahoma Tax Commission (OTC): The OTC does not send paperwork, therefore click here to get anything you need. It also contains data on payroll taxes, sales taxes, and other taxes.
Oklahoma Business Forms Page: Provides links to all of the state’s business forms, as well as information on whether they may be filed electronically.
Wage Law of the Oklahoma Department of Labor: A printable PDF of Oklahoma labor laws.

Also, look into resources and state-specific features in your payroll software.

Conclusion

Oklahoma’s wage and employer tax laws are not complex, necessarily, but there are quite a few to consider. You need to use Form W-4 in Oklahoma for determining withholdings and may have additional forms for special cases, like spouses of military members. And, stay abreast of changing payroll laws and regulations so that you don’t get penalized.