Payroll Taxes

If you have employees, you are responsible for payrollreported on the 941 should reconcile to the amounts
taxes. This is a term that lumps all the different formsturned in each month via the tax coupon or the
of employment taxes into one category known asEFTPS. At the end of the tax year, a Form 940 or
"payroll tax". In reality, payroll taxes encompass Federalinformation return must also be filed.
and state income tax withholding, social security andIf you are a small business with employees, or you
Medicare taxes (also known as FICA), Federalplan to begin operating a business with employees, you
unemployment tax (FUTA), as well as any state andneed to understand your tax responsibilities as an
local unemployment taxes assessed. Payroll taxes areemployer. The IRS provides links to all the relevant
deducted each pay period from an employees grossForms and Publications via their internet site at . Here
pay. The remaining money distributed to the employeeyou will find definitions and terms associated with
is what is known as "net pay". Along with any taxesemployees from the onset of hiring, to termination.
deducted from an employee's wages, there is a socialW-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 Medicarethose taxes. The IRS also provides you with
amounts withheld on each employee. This is theinformation concerning recordkeeping, employment
employer paid contribution. Until recently, mosteligibility 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 Federalsomeone is an employee. There is a tremendous
Tax Deposit System, taxes are now paid on abenefit to be had by investing the time and resources
monthly basis by all employers. The payroll taxes maynecessary to understand and comply with all the
also be paid via a tax coupon that is taken to yourfederal, state, and local regulations concerned with
bank and presented with the monies to cover theemployees 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 Agriculturalprofessional, your accountant.
employees) must be filed with the IRS. The amounts