So, you’ve been hired to help manage an organization’s payroll and taxes for the year. Managing these tasks accurately and efficiently is not as easy as most people think. Payroll can be a complex and difficult process that requires a lot of attention to detail. On the other hand, taxes are much simpler when you understand the basics of how they work.
Payroll processing can be a huge drain on time, particularly if you’re being asked to file multiple 1099s for the same clients. Wouldn’t it be great if you could avoid having to file multiple 1099s? You can create a company file and then choose to send one 1099 to your clients.
Here’s how to keep on top of payroll and taxes:
- Federal Income Taxes
Did you know that virtually no one pays their Federal income taxes in a timely manner? In fact, the IRS estimates that nearly three-quarters of Americans will owe at least some federal income taxes in 2011 and that almost 60 percent of taxpayers will owe more than $200. In order to stay ahead of the IRS, it is essential that you file the correct forms and pay your taxes on time. If you can’t pay your tax bill by the time the IRS sends you a bill, contact your accountant for help.
- Federal Insurance Contributions
As the U.S. population ages, Social Security will begin to pay out more money. At the same time, Medicare will require more money from those who are already enrolled. The government administers both programs, so having it all work the way it’s supposed will require some careful planning. FICA is one of the principal funds that Social Security and Medicare use for their operations, and all employers contribute to this fund.
The federal payroll tax is the total amount of money you and your employer each pay to the federal government. It does not represent the total amount of money paid to your employees, but rather the amount that is deducted from every paycheck for Social Security, Medicare, and Federal Income Tax. If you have a gross salary of $50,000, then your FICA tax is $7,000.
- Additional Medicare Tax
If you’re a small business owner, you’re probably familiar with the additional Medicare tax. The additional Medicare tax is equal to 0.9% of the lesser of the following: the employee’s wages or the employee’s self-employment income. The additional Medicare tax is imposed on all covered wages and self-employment income.
Whether you’re a small business or a large corporation, understanding the Medicare taxes that you should pay is imperative to running a successful business. The additional Medicare tax is a 2.9 percent tax that was created in 2013, and it applies to wages and self-employment income that is over $200,000. If you are a self-employed individual, this tax applies to net investment income, including dividends, capital gains, and interest. If you are an employer, this tax applies to compensation, including salaries, bonuses, and commissions.
- Federal Unemployment Tax
Federal Unemployment Tax (FUTA) is a tax that Congress passed in 1935 to help offset the cost of the Great Depression. And while the program has been changed, it has not been significantly altered since its inception.
As I have mentioned before, keeping on top of all the required information of Payroll and Taxes is very important to a business owner. When they don’t know, they hold too much of an expectation that they should have all the answers. If they don’t know, they don’t provide the service they are supposed to, and ultimately, they end up losing money.
Your business will need to keep track of all its expenses and expenses to ensure that you do not go over by more than what you are owed. This includes keeping track of all of your payroll and taxes. Be sure to keep track of all of your payroll and tax obligations and ensure that the employees are not overpaid.
You have to keep on top of payroll and taxes to keep your business running. Even if your business is small, you still have to pay yourself and your employees on time and keep your accounting up to date. A system that is easy to use and understand is the way to go.