Small business owners know payroll can take up a fair amount of time, but do you know just how much time? One study says many are taking up to five hours per pay period to get the numbers crunched.
Over the course of a year, that adds up to hundreds of hours. One of the reasons payroll takes so much time is because you have to deal with employer payroll taxes.
What are employer payroll taxes and what do you need to know about them? This helpful guide will get you started.
What Are Employer Payroll Taxes?
You probably know about some of the employee payroll taxes you need to submit to the relevant tax body. In most places, you’ll need to withhold income tax from your employees’ paychecks.
Depending on where you’re located, you may need to make other deductions. In the US, for example, your employees pay into Medicare with each paycheck.
There are some taxes that are paid by you as the employer. Employment payroll taxes often include amounts for unemployment insurance programs.
Employer Payroll Taxes in the US
Employers operating in the United States have quite a few payroll taxes they need to look after. You can expect to pay:
- Social Security tax
- Medicare tax
- Federal unemployment tax
In many states, you’ll also pay into a state unemployment program.
Most of these are shared costs between the employer and employee. Social Security, for example, is set around 12 percent of an employee’s earnings. The employer and employee both pay half of that amount.
You’ll only need to pay around six percent for Social Security. Medicare is similar. Some states operate their unemployment programs as a joint contribution between employees.
Keep in mind that federal rules will be the same no matter which state you operate in. Other payroll taxes may change from place to place.
Employment Taxes Around the World
If you operate in more than one country, you might hire employees in other locations. That can add even more complexity to your payroll operations.
When you pay an employee in another country, you’ll need to be aware of the payroll taxes in that country. In Canada, for example, you’ll need to pay into the Canada Pension Plan and Employment Insurance.
In Australia, the individual states and territories levy various taxes on employers. Most states and territories charge a general-purpose payroll tax.
Other states have more payroll taxes for employers. In Victoria, you’ll need to contribute to Medicare and the state-funded pension plan.
Call in the Payroll Experts
As you can see, payroll taxes for employers can be quite complex. Expanding your business, whether to a new state or a new country, can make it even more complex.
In this case, the best thing you can do is consider payroll outsourcing. You may send all your payroll to an international team of experts. You might also decide to get help with the new market you’re entering.
Keep Payroll Rolling
If you asked, “What are employer payroll taxes?”, you now have the answers. With the right advice, you can streamline payroll and keep your business running smoothly.
Looking for more business advice to supercharge your operations? Check out our library for more helpful tips!
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