The costs of employing workers go beyond wages and benefits. Employers are also responsible for paying a share of payroll taxes based on each employee’s wage, salary, and tips or bonuses.
Payroll taxes are taxes paid by both the employer and the employee, but it’s the employer’s responsibility to withhold the applicable payroll taxes from each employee’s wages and remit them to the applicable federal and state tax agencies. That’s in addition to paying their own share of the taxes. Together, these taxes are used to pay for social insurance programs, like Medicare and Social Security.
Understanding payroll taxes and your responsibilities as an employer is essential to ensure you avoid significant penalties.
The employer payroll tax is the portion of the total payroll taxes for each employee that the employer must pay. The exact amount an employer will owe in payroll taxes depends on the number of employees they have and how much they pay them. Payroll taxes are calculated as a percentage of every employee’s gross taxable wages.
Employers are responsible for several specific payroll taxes:
Employers who employ international workers will likely be responsible for additional payroll taxes in each country where those international employees reside. That’s part of what makes managing payroll compliance for distributed teams more difficult.
It’s fair to say that understanding and controlling payroll can be a complicated, time-consuming task for employers. A payroll breakdown form is one tool that can make the process simpler.
Payroll breakdown forms organize all the relevant payroll information into an easy-to-read report. These forms can contain information like gross and net wages, tax withholdings, and other deductions for employees. Typically, employers can also view this information at the departmental level or for the whole workforce. More granular forms may show how much paid time off (PTO) each employee has taken and how much the employees and employer have contributed to retirement plans.
You can use this information to calculate the FICA taxes and unemployment taxes your company must pay in payroll taxes each quarter. Having all the relevant information nicely summarized in one form makes managing your payroll tax burden much easier.
Free yearly payroll breakdown forms are available online from several sources. You simply enter the relevant information as needed and these forms help ensure that the payroll data you provide to federal and state tax agencies is accurate.
The payroll reports employers must file regarding payroll taxes include:
Once again, businesses operating in more than one country must be aware of their multi-country payroll obligations. More forms will likely be required to pay payroll taxes in other jurisdictions.
If managing all these components of payroll taxes sounds overwhelming, there is a solution. Oyster’s international payroll software makes managing payroll taxes simple, even with a global team.
Change the way your business handles payroll for the better by registering for an account today.
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