Small business owners are usually found looking for reliable bookkeeping services in Sonoma County. Employment tax is one of the essential parts of any business. If you are aspiring to set up your own company, this is meant for you. Before setting up your payroll system, and even before you start hiring your employees, you should be well informed about the various kinds of employment taxes.
What are Employment Taxes?
Employment taxes are those taxes that your business and your employees are liable to pay to the federal, state, and local tax agencies. It is worth noting that self-employment tax or Social Security and Medicare tax for self-employed business owners are also types of employment tax.
For some of the taxes, such as the federal and state withholding, the employer just needs to withhold the tax amount from the employee’s paycheck, and submit to the specific taxing authority.
Taxes you should be paying
Some other kinds of employment taxes, including FICA taxes (Social Security and Medicare)should be taken from your employee’s paycheck, and be paid to the authority by the employer. In this case, we assume you are the employer.
There are some others as well, such as unemployment taxes and workers compensation. For these, it is entirely your responsibility as an employer to pay. In those cases, your employees won’t be contributing from their pay.
Trust Fund Taxes
There are certain kinds of employment taxes known as the trust fund taxes. These taxes are to be withheld from your employee paychecks. As an employer, you owe this amount to the IRS as well as the specific state and local tax authorities. Just to add some point to this topic, these funds are included in your business accounting, however, your company doesn’t own any of these funds.
Disciplined payment is a must
You should make payment of these taxes periodically. As an employer, you are required to submit the required amount to the appropriate federal, state, and local taxing authorities. While your business should always have such taxes ready at disposal, it’s essential that you don’t use up these funds for your business transactions.
Many new business owners commit such a blunder, which you must avoid at all expenses. Not only your spending of this fund will affect your business credit, but the IRS might even penalize you. It’s important to keep track of your funds, and more importantly, have them monitored by expert professionals.
As a respectable business owner, you understand the importance of proper tax planning. If you are looking for a reliable bookkeeping company in Sonoma County, consider Virtual Jeannie Bookkeeping Services Inc. Call them at 707-664-1425.