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Tips And Simple Guidelines On How To Calculate Payroll Taxes
By: Sara Jenkins
Managing a business small, medium or big requires you to pay your taxes, as well
as your employees taxes. Managing a payroll can be an arduous and taxing job, no
pun intended. There are laws that require us to pay taxes and everyone have to
comply with that. But keeping up with the payroll can give many people sleepless
nights. There are so many deductions needed to be done and they have to be exact
to avoid confusion and complications later on. State and federal taxes are very
strict and you don’t want the IRS pounding on your door because of some
mistakes. Make sure that you do your calculations correctly to avoid a mess
later on. Keep your payroll records and tax payments as your reference so you
have proof of the deductions and payments you have done. Different states have
different laws about records; check it out with your lawyer or accountant to
make sure.
So just what are payroll taxes? Payroll taxes are the taxes that every business
are required to deduct from the employees salary and pay to the state and the
federal government, you are required to do this in behalf of your employees.
Aside from withholding state and federal taxes, social security and medicare
taxes are deducted also from the salary as required by law. The business on the
other hand must match the amount paid for the social security and medicare.
In stating to calculate payroll taxes, each of your employee must complete an
IRS form W-4. This form will be used to calculate payroll taxes. In the W-4, you
can calculate the amount of the federal income tax, and because most states have
income tax structures that are based on the federal taxation system, you may
also use this form to calculate the state tax to be deducted from the salary of
your employees. Also needed to calculate payroll taxes are the percentage
currently used for the social security and medicare. Both the employer and
employee split the amount needed to be paid. Whatever is deducted from the
employee to pay the social security and medicare taxes, the employer must match
that amount.
Aside from those, the law requires the employer to pay federal and state
unemployment tax; this is part of the payroll taxes. Federal and State
unemployment taxes (FUTA and SUTA) are based on the amount of unemployment
claims that are filed by employees that you have released or fired. FUTA rates
are the same for all state, while SUTA rates will differ from state to state. If
your employee earns more than seven thousand dollars per annum, you do not have
to pay those taxes anymore.
For some business owners, doing the payroll and to calculate payroll taxes just
gets in the way of the day to day business he or she has to do. That’s why some
proprietors get payroll services to do the dirty work for them. But this means
more expenses for the company. While for some this is worth the money, small
businesses with a small labor force should just do their own payroll. What they
get is the luxury of concentrating more on their business without the need to
worry about how to calculate payroll taxes. Just remember, always obey the laws
so that you do not complicate matters which could end up to losing the business.
About the Author:
Online entrepreneur Sara Jenkins, is dedicated to helping others and their needs to succeed in life by offering free payroll tips everyday. To learn more about her free payroll program, and to sign up for her FREE Payroll articles and FREE bonus how-to books and resources, visit http://www.PayrollXpert.com |
