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Payroll taxes consist of the Federal Unemployment Tax Act (FUTA), State Unemployment Tax Act (SUTA), and the Federal Insurance Contributions Act (FICA), which consists of the Social Security Tax and Medicare tax. These are considered to be employer payroll taxes and the payroll tax rates are governed by national and state agencies such as the IRS and the appropriate state agency.
So what are the other questions small business owners have? It?s things like how are you supposed to calculate payroll taxes? Is there such a thing as a payroll calculator? What is the difference between payroll taxes and income taxes? Why do I have to pay federal taxes and state taxes? These questions are all too common so that?s why many experts suggest using a payroll service. Payroll service companies handle all things relating to payroll including making your payroll tax deposits and liabilities.
The difference between payroll taxes and income taxes is actually quite simple. Payroll taxes are paid by the employer and income taxes are paid by the employee. The federal payroll taxes consist of FUTA, FICA, and Medicare. The state payroll tax is SUTA. The state income taxes paid by employees consist of state and local taxes as well as SDI. The federal income taxes paid by the employee consist of federal taxes, FICA, and Medicare.
When outsourcing your payroll and Sacramento payroll taxes the payroll service company will calculate the payroll taxes and make the payments on your behalf. This includes all employer taxes such as FUTA, SUTA, Social Security Tax, and Medicare as well as employee taxes such as Federal Payroll Taxes, FICA, Medicare, SDI and State Taxes. The payroll tax rates are changing all the time so the payroll service basically acts as your payroll calculator. In addition, they make the payments electronically to the IRS or appropriate state agency in your name so you are able to verify they make the correct payroll tax payment.
To summarize, use a payroll service! This will take the burdens out of payroll and payroll taxes for your organization.
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