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