If you own your own company and you have employees doing work for you, then you probably know by now how important it is to pay your payroll taxes. What you may not know is how important it is to calculate payroll taxes the right way. If you end up making a mistake, it could cost your company thousands or even millions of dollars. The Internal Revenue Service is really strict about the taxes that they receive and work to make sure that they are accurate and real. Because of this, you should make sure that you calculate payroll taxes for your company in a way that ensures accuracy. You can do this several ways.
The two main ways to calculate payroll taxes are to have an accountant do it for you, or to use a software program to handle the calculations. Either way is good. For large corporations, it’s best to use both approaches. This will ensure the best results since you will likely have more errors when you have a lot more employees. For smaller companies, you would do well with either an accountant or a software program. If you only have a few employees at any given time, the cheapest and best way to calculate payroll taxes is to use the software.
Really, it’s up to you and what you think is best for your company. With whatever situation you choose, you will still have to do some of the work on your own. For example, it is imperative that you have your new employees fill out a W-4 form before they ever start working. This form will let you know whether that employee is married or single and whether they have any dependants. These aspects affect how much taxes you will withhold from their pay. You definitely need this information when you calculate payroll taxes.
You should be aware that some of the payroll taxes that will need to be paid will come from your company. Sure, you will be withholding taxes from your employee’s paychecks, but that will only make up a portion of what’s due. Your company is responsible for the rest. When you are calculating your payroll taxes, make sure that you keep this in consideration and make sure that you set aside company money for that purpose each year. Then you will be best prepared for the tax season and for payroll taxes specifically. Now you know what it takes to take care of your company’s payroll taxes. Now you will be a lot better equipped to handle it when the situation arises.