Introduction to How to Pay Payroll Taxes
It may be hard to believe, but tax season is upon us once more. Being an employer means reporting on and depositing your workers’ taxable income on a regular basis. This includes full-time, part-time, contracted parties, and yourself.
At the federal level, most of your reports such as Medicare and income tax are typically consolidated on forms such as the 941. However, before we get that far, there are a few other things you need to handle first, something that you will likely have to handle often as a business owner with employees: payroll taxes.
Your payroll systems should be set up in advance in order to make the preparation at tax time much easier. Then you want to check to make sure you have the right due date for filing and depositing; there is more than one. Once these are established and your business’ employment taxes are calculated, you are ready to begin. In this article, we will thoroughly explore how to pay payroll taxes properly.
The Joy of Reporting (Income Tax, Social Security and Medicare)
Form 941 is the everyman’s form. Also called the Employer’s Quarterly Tax Return, it encompasses withheld taxes, Social Security, and Medicare. This one even has spaces for withholdings from sick pay and supplemental unemployment.
If you are the nice person who grows Brussels sprouts, you may need Form 943. The Annual Federal Tax Return of Agricultural Employees allows you to report agricultural wages.
If you are a smaller concern with liabilities of $1,000 or less, the government is still concerned. You need to file Form 944, Employer Annual Federal Tax Return (for small business).
Non-payroll matters can be found on Form 945. Do you have funds from backup withholdings, for example? If so, you will want to use Form 945.
What to Know About the FUTA
Of course, the federal government would never forget you. Form 940, the Employer’s Annual Federal Unemployment Tax return (better known as FUTA) is not based on employee withholdings. This is the employer’s contribution to unemployment compensation.
The Social Security Administration
Each year, you will have to send Copy A of Form W-2 for each employee. Additionally, as an employer, you will need to include Form W-3. This is a summation of the collective W-2’s and should be included at the same time.
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Getting It All Together
To pay your taxes properly, you will have to set up an account with EFTPS. This is the IRS’s hyper-secure payment portal. You will have to enrol, and it will ask for a verifiable bank account. This system is free, and it will send you an emailed confirmation of payment for your records.
While paying taxes is not an entirely “painless” experience, there are two things you can do to streamline the process. Most important of all, just be sure to use the information at hand to execute your responsibilities as efficiently as possible. With time, it will become much easier.Paycom News