If you are running a US company, you need to pay payroll taxes. There is no doubt that handling payroll taxes is one of the toughest jobs there. In this, you need to pay attention to Social Security and Medicare, too. Every new business must understand about payroll taxes and don’t fall into the trap of penalties.
In this blog, we will focus on payroll taxes, some of the important aspects that you need to know about this, challenges you might face, and more. Once you understand these aspects, it will surely help you handle things more profoundly. If you are still facing issues, you must talk to a federal tax attorney and get help.
Things You Must Learn About Payroll Taxes
Employees must pay Payroll taxes, and the amount they are giving is equal to the money that the organization has to pay. The aim of this tax is to offer support to a person when he retires and to other medically challenged people. Take a look at some of the most important aspects of payroll taxes-
1. Understanding Social Security Tax Is Important
The rate of social security tax can vary. You can take the average rate as 6.2% for both employees and employers. We have already been told that this portion of the tax is for retired, disabled people.
2. Use of Medicare Taxes
Medicare taxes are another part of payroll taxes. Here, the rate of the tax is around 1.45%. If you are an employee and your earnings are over $200,000, then you have to pay an additional amount of tax.
3. What About the Federal Unemployment Tax Act?
Finally, there is a federal unemployment tax of 6%. Talk to a tax professional who can help you find out the mysteries of taxation and get you the best deal possible.
Some Challenges We All Face During the Filing of Payroll Taxes
There are some challenges as well for payroll taxes.
a) Compliance Issues
You have to handle so many different aspects while paying payroll taxes. Understanding tax rates, wage limits, and other aspects can be a daunting task. Any miscalculation will make the whole thing invalid. If you are not comfortable managing your payroll taxes, talk to an EDD audit lawyer in Los Angelesfor help.
b) Change in the Regulations
Federal laws about payroll taxes or any other taxes are not constant. There have been significant changes in the regulations over the years. Unless you check them constantly, it is hard to track these things.
c) Possible Penalties
IRS is quite strict about the non-payment of any kind of taxes. If you don’t pay your payroll taxes, things will be difficult to handle. You will then have to pay the penalties decided by them. The amount can be big depending on the tax amount.
d) Manage Cash Flow
Finally, you will have to ensure that there is enough liquidity in your organization to cover the payroll taxes. Try to avoid missing any payment, as it can hamper your operations. We hope you will check all the details about payroll taxes, use the best financial tools, and avoid getting into trouble. Don’t forget to talk to an expert for help.
