Payroll taxes are an important consideration for any employer, but they can be particularly challenging if you’re a small business owner. That’s because as a business owner, you’re also an employer. Even if you’re self-employed and don’t have any employees, as the employer you remain responsible for paying these taxes. Failure to pay them can result in serious penalties.

Here is what I Need to Know about Payroll Taxes as an Employer by Aron Govil:

What Kinds of Employee Payroll Taxes Must I Pay?

You have to withhold several different kinds of payroll taxes from your employee’s wages or salary. These include federal income tax withholding, state income tax withholding, Social Security (FICA), Medicare, unemployment insurance and perhaps additional local employment taxes depending on where you’re located.

How Much Will I Have to Withhold From My Employee’s Wages?

The amount is based on how much they earn each pay period and the information they provide about their marital status and number of withholding allowances they’re claiming on their Form W-4

How Often Do I Have to Withhold Taxes From Employee Paychecks?

You must remit payroll taxes to the Internal Revenue Service (IRS) by specific dates during each year. The deadlines are different for federal income tax withholding, Social Security tax withholding and Medicare tax withholding. Employers typically deposit these withholdings with one or more financial institutions at least once a month.

What Are Some Penalties for Failing to Pay the Proper Amount of Payroll Taxes?

The penalty for failing to pay proper amounts in your employer’s quarterly payroll tax returns—Form 941—is 10% of the amount you should have paid but didn’t . You can also be subject to significant penalties if you fail to file your employer’s tax return—Form 940 or Form 944—by the due date.

What Are Some Alternatives If I Can’t Pay?

According to Aron Govil There are several alternatives, but they’re generally reserved for situations where you can’t pay because of financial hardship. You may be able to apply for installment payments with the IRS, which allows you to make smaller monthly payments until you’ve paid off all of your taxes. The agency also provides other relief programs, including ones that give qualifying employers more time to pay outstanding balance due. For example, under its Fresh Start initiative, it offers employers whose payroll taxes were withheld from employee pay prior years but not yet remitted an opportunity to come into compliance without incurring failure-to-deposit penalty.

What If I Have Employees in Other Countries?

You’ll continue to have the same obligations that apply to U.S.-based employees, but you might also end up having additional withholding responsibilities if your business operates in multiple countries. For example, you may be required to pay tax withholdings in each country where your employees are located. Your accountant or other tax professional can guide you through this process.

FAQs:

1. What is an employer’s quarterly payroll tax return?

IRS Form 941, Employer’s Quarterly Federal Tax Return, is used to report income taxes, Social Security and Medicare taxes, and federal unemployment (FUTA) taxes that have been withheld from employee paychecks. They are due by the last day of the month following the end of each quarter—March 31, June 30, September 30 and December 31

2. How does an employer remit payroll taxes?

If you have an accountant or payroll service do your bookkeeping for you, they will send the proper amount to the IRS according to when the taxes are due. If you do your own payroll, you can save money by using a payroll service like ADP, Paychex or Gusto that offers electronic payment options. You must remit taxes in full each time.

3. What is SUTA?

The State Unemployment Tax Act (SUTA) provides funds for unemployment insurance benefits to workers who lost their jobs through no fault of their own. State agencies calculate the tax rate based on an employer’s experience rating, meaning how many former employees have filed claims for unemployment insurance over the previous few years. Employers have several ways to pay their SUTA tax bill, including setting up automatic deductions from employee paychecks. About 20 states require employers to make SUTA tax payments electronically.

Conclusion:

In most cases, the penalty for underpaying your employer’s quarterly payroll tax returns—Form 941—is 10% of the amount you should have paid but didn’t . You can also be subject to significant penalties if you fail to file your employer’s tax return—Form 940 or Form 944—by the due date. If you have an accountant who does the bookkeeping for you, they will send the proper amount to the IRS according to when the taxes are due. You must remit taxes in full each time.