Are you starting your own business? Good for you if that’s the case. It’s really hard to start a business and it takes a lot of initiative and a lot of money. The next thing you need to do is learn a lot about what it takes to actually run that business. You must be wondering what are payroll taxes. Well, it’s good that you wonder since this is a really important aspect of running a successful and law abiding business.
The first thing that you need to know about what are payroll taxes is that they only apply to some companies. If you plan to have a sole proprietorship and are not going to hire any employees, then you won’t be dealing with payroll taxes. If you plan on having anyone work for you, whether it is one person or one hundred, this is when you definitely have to deal with payroll taxes.
Another thing you should know about what are payroll taxes is that you will be paying some of them yourself. Or at least, your company is. Most of the taxes that need to be paid will come straight out of your employees’ paycheck. This is done by you and is called ‘withholding.’ You keep a certain amount of their pay, which you write down on their check, and keep it in a fund. Still, your company will pay some of it as well.
The portion you will pay is called FICA. This is both the social security tax and the Medicare tax. You are responsible for paying half of it and your employee is responsible for paying the other half. The amount of this is set at 7.65% for each of you. 6.2% of it goes to social security and 1.45% goes to Medicare. If you wonder about what are payroll taxes, this is the essence of that question.
It is really important that you figure out what are payroll taxes before you hire anyone. Although it is helpful to know the barebones of what it’s about, you should still learn more. This is especially the case when you have your own small business as you will need to handle a lot of the aspects by yourself.
You can learn more about payroll taxes and how they affect your business by getting books on the subject. There are plenty of books like this in the business section of most bookstores and libraries. There are also classes that you can take that will go into even greater detail so that you have the best education for the subject.