| Small businesses owners are dependent upon each | | | | limits of liability. Once a particular level is reached in |
| state for their liability when it comes to payroll taxes | | | | income, the tax rate may be reduced, or sometimes |
| for their state of operation. Each state varies, and | | | | eliminated. |
| there are even some states that do not withhold state | | | | Small businesses operating in one more than one state |
| tax and require no state income tax filing. Each state | | | | may find themselves liable for payroll tax in each state. |
| requires that an employer deduct and withhold | | | | If you operate in multiple states, you should contact |
| unemployment tax, just the same as at the federal | | | | each state of operation to determine your liability and |
| level. | | | | setup the necessary accounts for deductions. Quite |
| Generally, however tax rates for the state level on | | | | often accountants that handle state taxes in your area |
| unemployment tax will vary depending upon the | | | | will be aware of each state's filing requirements and |
| employment history of the business. Once in business | | | | be able to assist you. |
| long enough, a tax rate can be established based upon | | | | The greatest concern as a small business that you will |
| the employer's experience with benefit charges and | | | | have on the state level will be the unemployment tax |
| taxable payroll. | | | | that you are assessed. Unemployment compensation |
| Taxes are deducted in the same manner as federal | | | | is administered on the state level, and can therefore |
| taxes, each pay period and filed with the applicable | | | | greatly affect your tax liability. Your tax rating |
| state on a monthly basis. Most states will also require | | | | determines your tax liability, and new businesses are |
| a quarterly information report comparable to the 941 | | | | given a standard rating until enough time has passed |
| federal forms. Withholding rates on the state level are | | | | with operations to assess an individual rating based on |
| much lower than the federal rates. Also, there are | | | | employee benefit charges and gross taxable payroll. |