Employees are frequently the very heart of a small business. No matter the industry or organizational sector, employees develop, promote, and provide products and services directly to the consumer. Employee compensation can be one of the largest, most difficult expenses that a small business can incur, but compensation is not the only thing that can make having employees such a large expense. In addition to compensation, a business must pay payroll taxes, and must remit these taxes along with any tax withheld from employees to the Internal Revenue Service, state government, and local governments. The following defines payroll taxes in greater detail:
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Taxes paid by employers include Federal Unemployment Tax Act (FUTA), Federal Insurance Contributions Act (FICA), and state unemployment tax
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Taxes remitted by employers include federal income tax withheld, state income tax withheld, FICA taxes withheld, and local taxes withheld
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Depending on the amount of legal tax liability will determine if an employer needs to remit payroll taxes semi-monthly, monthly, quarterly, or annually
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Employers should make certain to file and pay the correct tax amount on-time, as penalties for mistakes, late payments, or willfully avoiding taxes can be severe
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Employers should also make certain to keep all employee and tax documents in case of an IRS audit. These documents include but are not limited to W-4, 940, and 941 forms
Payroll taxes require organization and planning, and with the right partnership, what might seem to be a difficult undertaking can actually lend itself to your business’ long-term success. For more information on how a partnership with Rainey Accounting can make payroll taxes easier for your business, contact us today for a free consultation.
