93 percent of taxes in the United States are collected by businesses, rather than individuals. So, if you own a business you’ll want to ensure your payroll taxes are on point, rather than risking the wrath of the Internal Revenue Agency.
So, how do you make your payroll taxes as simple as possible, to avoid any mistakes? Read on to learn about simplifying calculating payroll taxes.
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Use Payroll Software
There are many payroll software programs available that can help you calculate payroll taxes automatically. These programs often integrate with your accounting software, making it easy to track payroll tax payments and deductions.
This will also help ensure that you catch any unpaid payroll taxes, so you won’t end up with a ton of paperwork or worse when the mistake catches up with you.
Use Tax Tables
Tax tables are charts that show the amount of tax that an individual or business must pay based on their income or taxable amount.
Tax tables are typically used to determine the amount of income tax that needs to be withheld from an individual’s wages or salary.
The IRS provides tax tables that you can use to calculate federal income tax withholdings for your employees. These tables take into account the employee’s filing status and the amount of their income.
Withhold the Correct Amount
Make sure you are withholding the correct amount of payroll taxes from your employees’ paychecks. If you end up withholding too little, you may have to pay a penalty. If you withhold too much, you may have to issue a refund to your employees. If you withhold too much, you may have to issue a refund to your employees.
The specific tax rates and rules for payroll taxes vary depending on the tax and the jurisdiction in which the employee works, so keep the state where every employee lives in mind.
Understand The Different Rules For Different Employees
There are also differences in the payroll tax rules for different types of employees.
For hourly workers, payroll taxes are typically calculated based on the total number of hours each employee worked and the employee’s wage.
The employer is responsible for withholding the appropriate amount of payroll taxes from the employee’s pay and for remitting those taxes to the government.
Stay Up to Date on Tax Law Changes
Tax laws can change frequently, so it’s important to stay up to date on any changes that might affect your payroll tax calculations. You can stay informed by subscribing to IRS newsletters or consulting with a tax professional.
Consider Hiring a Payroll Service
If you’re having trouble managing payroll taxes on your own, you may want to consider hiring a payroll service.
These companies can handle all aspects of payroll, including tax calculations and compliance, freeing up your time to focus on other aspects of your business. You can also consider working with paycheck processing companies.
Make Calculating Payroll Taxes Simple: Start Today
There are a lot of ways to make calculating payroll taxes more simple. Try out a few, and enjoy how much easier your life is in no time.
Do you need more help optimizing your business finances? We’ve got you covered. Take a look through some of our other excellent posts.