| If you have employees, you are responsible for payroll | | | | reported on the 941 should reconcile to the amounts |
| taxes. This is a term that lumps all the different forms | | | | turned in each month via the tax coupon or the |
| of employment taxes into one category known as | | | | EFTPS. At the end of the tax year, a Form 940 or |
| "payroll tax". In reality, payroll taxes encompass Federal | | | | information return must also be filed. |
| and state income tax withholding, social security and | | | | If you are a small business with employees, or you |
| Medicare taxes (also known as FICA), Federal | | | | plan to begin operating a business with employees, you |
| unemployment tax (FUTA), as well as any state and | | | | need to understand your tax responsibilities as an |
| local unemployment taxes assessed. Payroll taxes are | | | | employer. The IRS provides links to all the relevant |
| deducted each pay period from an employees gross | | | | Forms and Publications via their internet site at . Here |
| pay. The remaining money distributed to the employee | | | | you will find definitions and terms associated with |
| is what is known as "net pay". Along with any taxes | | | | employees from the onset of hiring, to termination. |
| deducted from an employee's wages, there is a social | | | | W-4's, W-2's, I-9's, all the employment taxes you will be |
| security and Medicare liability incurred by the employer. | | | | responsible for reporting, all the rates associated with |
| You must match the social security and Medicare | | | | those taxes. The IRS also provides you with |
| amounts withheld on each employee. This is the | | | | information concerning recordkeeping, employment |
| employer paid contribution. Until recently, most | | | | eligibility verification, benefit and retirement plans, and |
| employers reported and paid payroll taxes quarterly. | | | | even the definition to be used in order to determine if |
| With the advent of the EFTPS, or Electronic Federal | | | | someone is an employee. There is a tremendous |
| Tax Deposit System, taxes are now paid on a | | | | benefit to be had by investing the time and resources |
| monthly basis by all employers. The payroll taxes may | | | | necessary to understand and comply with all the |
| also be paid via a tax coupon that is taken to your | | | | federal, state, and local regulations concerned with |
| bank and presented with the monies to cover the | | | | employees and payroll taxes. However, you should |
| payroll taxes due. | | | | frequently seek the advice of a qualified tax |
| Every quarter, a Form 941 (or 943 for Agricultural | | | | professional, your accountant. |
| employees) must be filed with the IRS. The amounts | | | | |