Payroll Taxes

If you have employees, you are responsible for payroll taxes. This is a term that lumps all the different forms of employment taxes into one category known as �payroll tax�. In reality, payroll taxes encompass Federal and state income tax withholding, social security and Medicare taxes (also known as FICA), Federal unemployment tax (FUTA), as well as any state and local unemployment taxes assessed. Payroll taxes are deducted each pay period from an employees gross pay. The remaining money distributed to the employee is what is known as �net pay�. Along with any taxes deducted from an employee's wages, there is a social security and Medicare liability incurred by the employer. You must match the social security and Medicare amounts withheld on each employee. This is the employer paid contribution. Until recently, most employers reported and paid payroll taxes quarterly. With the advent of the EFTPS, or Electronic Federal Tax Deposit System, taxes are now paid on a monthly basis by all employers. The payroll taxes may also be paid via a tax coupon that is taken to your bank and presented with the monies to cover the payroll taxes due.

When you first start out the payroll jobs you will get are entry level ones and if you can learn these jobs really well and if you can perform these well then you will be able to become a specialist. These jobs basically require the employees to manage all of the payments of the rest of the employed in the company. When you start off you have to begin with being a clerk and your function is basically to create, manage as well as roll out the payment of every employees.

If you are a small business with employees, or you plan to begin operating a business with employees, you need to understand your tax responsibilities as an employer. The IRS provides links to all the relevant Forms and Publications via their internet site at www.IRS.gov . Here you will find definitions and terms associated with employees from the onset of hiring, to termination. W-4's, W-2's, I-9's, all the employment taxes you will be responsible for reporting, all the rates associated with those taxes. The IRS also provides you with information concerning recordkeeping, employment eligibility verification, benefit and retirement plans, and even the definition to be used in order to determine if someone is an employee. There is a tremendous benefit to be had by investing the time and resources necessary to understand and comply with all the federal, state, and local regulations concerned with employees and payroll taxes. However, you should frequently seek the advice of a qualified tax professional, your accountant.

Author: Matt Bacak