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Payroll Taxes
If you have employees, you are responsible for payroll taxes.
This is a term that lumps all the different forms of employment
taxes into one category known as "payroll tax". In reality,
payroll taxes encompass Federal and state income tax
withholding, social security and Medicare taxes (also known as
FICA), Federal unemployment tax (FUTA), as well as any state and
local unemployment taxes assessed. Payroll taxes are deducted
each pay period from an employees gross pay. The remaining money
distributed to the employee is what is known as "net pay". Along
with any taxes deducted from an employee's wages, there is a
social security and Medicare liability incurred by the employer.
You must match the social security and Medicare amounts withheld
on each employee. This is the employer paid contribution. Until
recently, most employers reported and paid payroll taxes
quarterly. With the advent of the EFTPS, or Electronic Federal
Tax Deposit System, taxes are now paid on a monthly basis by all
employers. The payroll taxes may also be paid via a tax coupon
that is taken to your bank and presented with the monies to
cover the payroll taxes due. Every quarter, a Form 941 (or 943
for Agricultural employees) must be filed with the IRS. The
amounts reported on the 941 should reconcile to the amounts
turned in each month via the tax coupon or the EFTPS. At the end
of the tax year, a Form 940 or information return must also be
filed. If you are a small
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business with employees, or you plan
to begin operating a business with employees, you need to
understand your tax responsibilities as an employer. The IRS
provides links to all the relevant Forms and Publications via
their internet site at www.IRS.gov . Here
you will find definitions and terms associated with employees
from the onset of hiring, to termination. W-4's, W-2's, I-9's,
all the employment taxes you will be responsible for reporting,
all the rates associated with those taxes. The IRS also provides
you with information concerning recordkeeping, employment
eligibility verification, benefit and retirement plans, and even
the definition to be used in order to determine if someone is an
employee. There is a tremendous benefit to be had by investing
the time and resources necessary to understand and comply with
all the federal, state, and local regulations concerned with
employees and payroll taxes. However, you should frequently seek
the advice of a qualified tax professional, your accountant.
About the author:
Matt Bacak became "#1 Best Selling Author" in just a few short
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or http://promotingtips.com
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