Whether it is a large corporation or the small business owner, one of the obligations that come with having employees presents itself in the form of payroll taxes. Nearly every country in the world has some form of payroll tax system in place. Often referred to as withholdings, employers are legally required to keep a certain amount of federal tax out of every employee’s earnings.
This can also include state taxes as well as FICA taxes. FICA taxes, or Federal Insurance Contributions Act, are what finances the federal programs Medicare and Social Security. A withholding of federal unemployment and sometimes even city taxes can make up part of payroll taxes on an employee’s check.