Take a moment to think back to the day you received your first real paycheck. If you're like many of us, you may recall experiencing some shock upon noticing that the check amount was much less than your actual salary.
A quick glance at the accompanying pay stub alerted you to the fact that your employer had reduced your pay by a number of deductions, the most significant of which were probably the amounts for federal and state taxes. As you're now aware, your employer was withholding from your check the various taxes that you, as a wage earner, had to pay.
Once you become an employer, you too will have to withhold taxes from your employees' pay and to deposit the withheld amounts with the appropriate tax agencies. Furthermore, as an employer, you yourself will also have to pay certain taxes based on the amounts you pay your workers.
Together, those taxes that you're required to withhold and those that you're directly required to pay comprise your payroll taxes. They may include federal, state, and perhaps local income taxes, Social Security and Medicare taxes, federal and state unemployment taxes, and, in some states, disability insurance taxes. And, regardless of whether you employ others, you can also expect to owe some payroll-type taxes on income that you receive from your business.
The key to controlling your payroll tax obligations is making all your payments when they're due, so you avoid getting hit with costly penalties. Toward this end, we'll help you stay on top of the rules by leading you through the following topics: