What Every Small Business Owner Needs to Know About Payroll Taxes
What Every Small Business Owner Needs to Know About Payroll Taxes
Atop the mountain of issues a small business owner must oversee, payroll taxes is one of the most important. Find out why. Image source: The Motley Fool/Upsplash
What are payroll taxes?
Payroll taxes are deducted from an employee's paycheck and fund programs like Social Security and Medicare. Learn about the Federal Insurance Contributions Act taxes and the Federal Unemployment Tax Act.
The bottom line cost
- Payroll tax for Social Security: The employee and employer each contribute 6.2%.
- Payroll tax for Medicare: Both parties contribute 1.45%.
Is it difficult to figure payroll taxes?
Payroll software can help, but understanding the math is essential. Calculate deductions based on taxable income and use W-4 information to determine federal and state taxes.
What happens if a business owner fails to pay payroll taxes?
Failure to pay payroll taxes can result in penalties, liens on business assets, or even criminal charges. It's crucial to manage payroll taxes diligently to avoid serious consequences.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.