News & InfoEP StoreAcademySupportCommunityProducts by Country
Blog Home

5 Top Payroll Tax Errors and How to Prevent Them

Tips to help ease the process of production payroll
September 28, 2021

Becky Harshberger

5 top payroll tax errors-calculator-accounting ledger

Are you kicking off a pilot for a new comedy series in Los Angeles? Or maybe, about to embark on a multi-million dollar blockbuster in Toronto? Whatever the size of your production, it helps to be aware of common payroll errors and how to avoid them. Luckily, with the help of our digital onboarding tool, SmartStartit will be a breeze getting your employees paid on time with paperwork that is error-free from the start.

Let’s review 5 of the most common areas for payroll tax errors and how you can avoid them!

1. California Loan Out Withholding

If your production is performing services in California, you must register with the California Secretary of State. On EP loan out start paperwork (or in SmartStart), the loan out must note if they are registered with the Secretary of State of California, North Carolina, and South Carolina (SC and NC have the same registration requirement as CA). The Entertainment Partners Paymaster will verify that the loan out is registered and in ‘Good Standing,’ meaning you’re required to be up-to-date on all fees, and have filed a corporate tax return from the most recent year. You can verify on this website here

If you miss checking this box, the system will automatically withhold 7%. This errori will quickly gets the attention of the loan out owner. Eventually, the production will ask for a refund, or the loan out will quickly correct any deficiencies, and ask for a refund in short order.   

Solution: If the loan out does not check the ‘registered to do business in CA’ box, ask if they intended to leave it blank, and advise them that they will be subject to a 7% withholding.

Check the EP edits (examples: SmartTime Edit, EP Employer Fringe Edit, EP Employee Fringe Edit). If you see a CA loan out withholding, verify that the loan out left the box unchecked. If they checked the box and the 7% withholding tax shows on the edit, call or email your paymaster with either of these questions:

  • Was the item an oversight?
  • Are they not registered with CA SOS? It can ocasioanlly happen that a loan did recently register with the state, but the website hasn’t been updated yet.

2. Loan Out Incentive Withholding

If your production is in one of the states mentioned, be sure the correct film incentive withholding is taken on each payment.

Missed withholding can impact the film credit, and may be difficult to collect after the production goes to post-production.

Solution: Check your starts and your edits, especially if a loan out starts in the middle of production.

3. Escrow Payments

When Entertainment Partners is asked to record escrows, chasing the required taxation becomes an issue. That’s why this is one of the most challenging and time-consuming errors to fix, and it frequently happens in one of two ways: 

  • When pre-production escrows do not consider the film incentive taxation requirements, or 
  • They are paid to an individual, but employment related taxes haven’t been held back

Solution: Prior to sending an escrow or advance payment, contact the Entertainment Partners Tax Support team. Our finance experts will calculate the taxes to hold back for the production, and save you a big headache in the long run!

4. Incorrect Resident or Work State

Oftentimes, the work state – the place where an employee is working on a job – may get mistakenly listed as the resident state, meaning the place where an employee claims as their permanent home for tax purposes. If this happens, crew members or talent may end up with a surprise W2 for a state they have never lived in, and it can cause complications when they file!

The error can be compounded if the resident or work state requires a local or disability tax, or an additional employer tax. If the withholding on an employee’s wages is also part of the state film credit (like loan out withholding) this can add additional complications.

Solution: In the first few weeks of a production, set aside a “check your paycheck” day! Verify resident and mailing addresses, email addresses, and work locations with all crew members and talent on payroll.

5. Tax Days and Work Days

If the wrong number of ‘tax’ days are listed on a timecard, it affects the amount of taxes on the paycheck. For example, there is a significant difference in taxes when you list 7 tax days versus 5 tax days.

Payroll systems are programmed to calculate a paycheck based on annual tables, so if you work one day, the system thinks you earn that same amount every work day of the year. This can cause taxes to be over calculated. The W4 an employee fills out makes the same assumption. Any intervention of either the tax days or changing the W4 could result in either an over withholding, or under withholding, of the employee’s true tax liability. To further complicate matters, adding the wrong number of workdays can impact union benefits as well.

Solution: Check those edits! It’s likely a keying error. Thanks to the new edit report feature on New SmartTime, you can check for those errors early. If you are not using New SmartTime, ask for both the employee fringe edit and the employer fringe edit. You’ll need to see both to catch these common errors.

For additional insider tips to help with your accounting, and even more customized expert advice on payroll, connect with the EP payroll team. We’re here to help make your production’s financial journey smooth sailing ahead!

Related Content

EP blog-square-tax day

Tips for Tax Day 2022

4/5/2022
Your ultimate tax filing checklist - the deadline this year is Monday, April 18th!
More

The Production Accountant’s Guide to Year-End Payroll

11/1/2022
A step-by-step breakdown of how to navigate pitfalls and fix production payroll errors for a smooth year...

Preparing for Year End: Focus, Find, and Fix!

10/28/2022
EP's payroll tax experts share best practices to identify and resolve payroll tax errors for a smooth year...
EP Blog_SQUARE_New York

NY Convenience Rule Impacts Remote Production Workers and Film Incentives

9/13/2022
How remote employee payroll taxes apply to New York-based productions and if an employee’s physical...
Streaming platform on tablet device

The Evolution of Residuals: How Streaming Changed the Model

8/11/2022
Understanding how residuals payments are calculated for new content on streaming platforms.
dollar signs representing digital crowdfunding

The Beginner’s Guide to Crowdfunding

7/26/2022
How filmmakers can leverage the power of social networks and online platforms to build buzz and secure...
Master Series Women in Animation-thumbnail

Women in Animation: A 3D View

3/24/2022
Marge Dean, Mandy Tankenson, and other women leaders from across animation come together to celebrate...
Bradley Cooper-nightmare alley

Meet the Assistant Director

3/16/2022
A conversation with Myron Hoffert ('Nightmare Alley')
International Film Financing panel-featured

Film Financing Explained: International Financing

3/10/2022
International production experts discuss how producers can utilize financing systems outside of the US,...
EP Blog_SQUARE-Sound Mixer-Lora Hirschberg

Meet the Sound Mixer

3/1/2022
A conversation with Oscar-winning re-recording mixer, Lora Hirschberg ('Inception', Skywalker Sound)
Digging Out of a Deficit-featured

Digging Out of a Deficit: What to Expect in the Second Quarter of 2022

2/25/2022
Federal and State Unemployment Insurance rates are rising. Learn how these changes will affect 2022 and...
EP Blog_SQUARE_International Film Financing

The Beginner’s Guide to International Film Financing

2/15/2022
What to know before you begin an international financing plan.
meet-the-executive-producer-just-mercy-sq

Meet the Executive Producer

2/8/2022
A conversation with Mike Drake ('Just Mercy') on the path to becoming and EP, and the role of social...

UK Production Incentives All Producers Should Know About

11/17/2022
Don't miss out on the UK's tax incentives, special programs, and national and regional funding...

Behind the Boom: Why the UK is a Hotspot for Production

11/17/2022
Explore the generous industry incentives, talent, and infrastructure available to productions filming in...

Special Report: Entertainment – A Hollywood Education

10/24/2022
It’s the best of times and the worst of times for employment in the entertainment/streaming industry.

Special Report: Entertainment – Soundstage Gold Rush

10/24/2022
Hollywood is experiencing an ongoing boom that fills its Los Angeles production hub to overflow levels.
EP Blog_SQUARE_Creating a development budget

The Beginner’s Guide to Creating a Development Budget

10/18/2022
Before you start the filmmaking process, learn what basics you need to budget for to get your idea off the...
UK Gov Growth Plan

Mini Budget; Big Changes: What the UK Government’s Growth Plan Means for Production 

10/12/2022
UK Chancellor Kwasi Kwarteng announces new Growth Plan (aka the “mini budget”) and a big shake up of the...
Topic: UK
More
EP Blog_SQUARE_Streaming service

Streaming Services Expand to Latin America and New Audiences

10/11/2022
SVOD providers look to Latin America as a gateway to global stories and new subscribers
Western Canada

Production Tax Incentives in Western Canada Every Producer Should Know About

10/4/2022
Alberta and Manitoba offer film and TV productions competitive tax incentive programs and versatile...

Film Industry Booms in Buffalo

9/20/2022
Western New York draws top filmmakers with expanded tax incentives, new soundstages, and architectural...
Changes to UK right to work checks

Important Changes to UK Right to Work Checks

9/20/2022
On September 30, 2022 the UK rules around right to work checks will change. Here’s what productions need...
Topic: UK
More
Master Series Square Thumbnail-Film Financing-Crowdfunding

Film Financing Explained: Crowdfunding

9/8/2022
Emily Best (Seed&Spark), Stacy Bradford (Indiegogo), and producer Zach Fineblum join us to discuss the ins...
EP Blog_SQUARE_US Expanded Incentives 2022-2

A Record Number of US States Expand Filmmaking Incentives in 2022

8/25/2022
Your guide to the latest news in production incentives and film programs to come from the 2022 legislative...
EP Blog_SQUARE_New US Incentives 2022

New US Film Incentives Introduced in Arizona, Indiana, Florida, and West Virginia

8/23/2022
As production continues to boom, new tax credits and other programs welcome industry to new locations...
Los Angeles Times logo-sq

Hollywood production in U.K. soars to record levels as crews complain of burnout

8/22/2022
Spending on film and high-end television shoots reach record-breaking amounts as production activity...
EP Webinar Panelists - US Production Incentives Update

US Production Incentives Update: New and Expanded Programs in 2022

8/19/2022
Film commissioners Colleen Bell and Sandy Lighterman, and production executives Jay Roewe and Ashley Rice,...
EP Blog_SQUARE-Atlantic Canada Expands Incentives

Atlantic Canada Expands Film Incentives in 2022

8/16/2022
Enhanced production incentive programs attract industry to Newfoundland & Labrador, Nova Scotia, and...
Mount Hood, Oregon

Building on Oregon’s Cinema Legacy

7/19/2022
How improved tax Incentives, job training, and production infrastructure is expanding the filmmaking...
5 Master Series panelists discussing Atlantic Canada production incentives-square

Production Incentives Update: Atlantic Canada

7/15/2022
Learn how productions can benefit from newly expanded incentives in Nova Scotia, Newfoundland & Labrador,...
EP Blog_SQUARE_Wes Hagen

Meet the Location Manager

7/7/2022
A conversation with award-winning location manager Wes Hagen ('Ozark,' 'Hidden Figures.')
EP Blog_SQUARE_filmmaking in new mexico

Forging the Future of Filmmaking in New Mexico

6/29/2022
As the film industry expands in the Southwest, New Mexico leads the region as top destination thanks to...
EP Blog_Jesse Wente

Supporting Indigenous Storytellers of Canada

6/21/2022
How the Indigenous Screen Office (ISO) offers advocacy and funding for First Nations, Inuit, and Métis...
Topic: Canada
More
Sian Richards and Queen Latifah-square

A Face Kit for Every Skin Tone

6/14/2022
Hollywood makeup artist Siân Richards is transforming the makeup industry for actors of every shade.
EP Blog_SQUARE-Pitching Reality Tv-blue

Pitching and Financing Unscripted Television

6/7/2022
Ready to sell your big idea for a reality TV program? This guide will help prepare you for the road ahead.
Jennifer Liscio

Spotlight: Jennifer Liscio, VP of Tax Incentives and Legal Affairs

5/31/2022
Meet EP's Canadian legal affairs and tax incentives domain expert, Jennifer Liscio, and learn how she’s...
EP Blog_Residuals and the streaming model

Residuals and the Streaming Model

5/24/2022
How residuals apply to historical content on new media platforms.
Bloomberg tax logo-Newsroom-Thumbnail

Remote Workforces Create New Employment Challenges for Employers

5/18/2022
Employers should be aware of any local tax obligations for employees working remotely.
EP Blog_SQUARE_World Revenues_global currencies

The Beginner's Guide to World Revenues, Foreign Sales, and Senior Debt

5/17/2022
Learn how shopping your project around the world to secure funding commitments for distribution rights can...
EP Blog_SQUARE_Fighting Hollywood Stereotypes-TTEI

Fighting Stereotypes and Rethinking Representation

5/10/2022
How TTIE is advancing authentic storytelling in Hollywood by empowering historically excluded writers and...
Oklahoma route 66 sign

A New Frontier in Filmmaking

5/5/2022
Oklahoma is becoming a production destination, thanks to new incentives and infrastructure programs.
contracting-in-a-covid-19-world-LC

Contracting in a COVID-19 World  

5/3/2022
The pandemic has affected how UK production companies contract crew. Here’s how to reduce the impact of...
terms-to-include-uk-contracts-LC

Terms to Include in UK Crew Contracts

5/3/2022
Common terms which studios and production companies include in their UK crew contracts.
Topic: UK
More
uk-gdpr-and-how-productions-reduce-exposure-LC

The UK GDPR and how Productions can Reduce their Exposure - Q&A with Sheridans

5/3/2022
Sheridans’ Associate Krishan Neelendra answers key UK GDPR questions from production companies and...
Topic: UK
More
KJ Lamb and Simon Donovan

Empowering the Next Wave of Production Accountants

5/2/2022
The EP Production Portal team was delighted to participate in the biannual Netflix Assistant Production...
cell phone with sticky note stating sign here

Six e-Consent Myths (and Why They’re Not True)

5/2/2022
Sheridans Associate, Sarmad Saleh, debunks some common e-consent myths.
Topic: Legal
More
Master Series Panelists-World Revenues, Foreign Sales, Senior Debt

Film Financing Explained: World Revenues, Foreign Sales, and Senior Debt

4/27/2022
Learn how working with agents, international distributors, and gap financiers can all factor into...

Producing with Purpose

4/27/2022
Creative Producer, Kimberly Goodman ('Selling Sunset', 'Project Runway') shares insights on creating...
recycling conversation

Sustainability in Production: Q&A with Nikki Saunders

4/22/2022
Nikki Saunders on sustainable filming practices, COVID-19, and why carbon offsetting isn’t a...
EP Blog_The Race to Net Zero is On for Big Studios

The Race to Net Zero is On for Big Studios

4/20/2022
Film and television studios are embracing the green movement in a big way. Here’s what you can expect to...
EP Blog_SQUARE_meet the cinematographer-dan-laustsen

Meet the Cinematographer

4/12/2022
A conversation with Dan Laustsen ('John Wick', 'Nightmare Alley').

Georgia Proposes Capping and Prohibiting Sale of Film Tax Credits

3/30/2022
The changes, if signed into law, would cap the amount Georgia hands out in film and TV tax credits at $900...
EP Newsroom-Thumbnail-Portland Business Journal

How Oregon’s updated film incentive law could boost the local economy

3/29/2022
A new Oregon film and media incentive law could draw more movie productions to the state.
EP Blog_Marge Dean

Opening Career Doors

3/29/2022
How WIA President, Marge Dean, is shaping the future of animation and empowering underrepresented genders
Anthony De La Rosa-EVP-Residuals

Spotlight: Anthony De La Rosa, Executive Vice President, Residuals

3/8/2022
Meet EP’s resident residual domain expert, Anthony De La Rosa, and learn what inspired him to enhance and...

Payroll & Finances

PayrollResidualsSmartStartNew SmartTimeProduction PortalEP On LocationSmartAccountingEP LiveSmartPOCASHétPayPaymaster Rate GuideEP Residency

Manage Multiple Productions

AssetHubSmartHubSmartHub Vault
Subscribe now

Be an industry insider with EP's
newsletters and alerts

LegalPrivacy NoticeSecurity
© 2022 Entertainment Partners. All rights reserved.