What Are Your Payroll Tax Responsibilities as an Employer?

Payroll calculations and taxes are one of the least enjoyable aspects of running a small business. Although it might seem like a fairly straightforward task at first glance, calculating and filing deductions require extreme accuracy and lots of time. But what are your payroll tax responsibilities as an employer? 

Let’s review your primary payroll tax responsibilities as a small business owner with employees.

What Are Your Payroll Tax Responsibilities as an Employer?


Payroll Tax Obligations

First, let’s review what payroll tax responsibilities you carry as a small business employer.  Payroll taxes or employment taxes are things you must consider. Some taxes are withheld from your employees pay while others are the responsibility of the employer. 

Payroll Tax Deductions:Federal Tax

  • Federal Income Tax Withholding
  • Social Security Tax Withholding
  • Medicare Tax Withholding
  • Local Tax Withholding


Additional Payroll Deductions

Voluntary payroll deductions are deductions agreed to by the employee. These deductions are withheld from the employee’s paycheck to pay for or contribute to various benefits which the employee voluntary participants.  Some of these payroll deductions could include:

  • Health Care Insurance
  • Life Insurance
  • Retirement Plans
  • Employee Stock
  • Job-Related Expenses Such as Union dues or uniforms

 Federal Tax

Employer Payroll Responsibilities

After payroll taxes are withheld from an employee’s paycheck you’re also responsible for:

  • Calculating Payroll Expenses through Financial Reporting
  • Paying Employer’s Share of Payroll Taxes
  • Preparing Reconciliation Forms and Reports
  • Sending Payroll Taxes to IRS
  • Filing Payroll Tax Returns to the IRS


Employer’s Portion of Payroll Taxes

Your small business is responsible for paying the employer’s portion of payroll taxes. This tax amount is an added expense on top of the employee’s payroll tax amount. You, the employer, must pay your portion of payroll taxes including:

  • Social Security Tax (6.2%)
  • Medicare Tax
  • Federal Unemployment Tax (FUTA)
  • State Unemployment Tax (SUTA)

Combined Payroll Taxes

The FICA tax is comprised of the Social Security & Medicare tax and this amount is paid by both the employee and the employer. Each party must pay half of the tax which in total is 15.3 percent.

Employee Tax:

  • Social Security (6.2%)Federal Tax
  • Medicare (1.45%)

Employer Tax:

  • Social Security (6.2%)
  • Medicare (1.45%)


Make Your Payroll and Compliance Simple

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