Running a small business isn’t easy. Just between getting new customers, paying your employees and getting a quality job done, a person can easily have their hands full. Unfortunately, there’s so much more a small business owner has to deal with when it comes to running their business and managing the administrative and financial aspects of entrepreneurship. One of these challenging facets many small business owners have to deal with is payroll taxes.
What are payroll taxes?
Payroll taxes are also known as employment taxes, since they are the taxes a business is required to pay as a result of having employees. As of January 17, 2021, according to the IRS page, Employment Taxes, “You must deposit federal income tax withheld and both the employer and employee social security and Medicare taxes. You also must report on the taxes you deposit, as well as report wages, tips and other compensation paid to an employee.”
As you can see from the IRS’s webpage, payroll tax (referred to above as employment tax), includes federal income tax withheld, as well as the social security and Medicare taxes for both the employer and the employee. Deposits of the correct amount must be made in a timely manner, as expected by the IRS. As we’ll discuss next, there are two different schedules for these deposits and you, the business owner, must determine the payment schedule by reviewing the proper information and acting accordingly.
When do you have to deposit payroll taxes?
As of January 17, 2021, according to the IRS page, Depositing and Reporting Employment Taxes, “There are two deposit schedules, monthly and semi-weekly. Before the beginning of each calendar year, you must determine which of the two deposit schedules you are required to use. To determine your payment schedule, review Publication 15 for Forms 941, 944 and 945, or Publication 51 for Form 943. If you fail to make a timely deposit, you may be subject to a failure-to-deposit penalty of up to 15 percent.
“Deposits for FUTA Tax (Form 940) are required for the quarter within which the tax due exceeds $500. The tax must be deposited by the end of the month following the end of the quarter.
As you can see, just figuring out when to make your payroll tax deposits can be a bit tricky. And that’s before we even get into reporting or calculating them! But don’t worry, in our next blog post, we’ll continue answering questions about payroll taxes and continue giving you the information you need, so stay tuned!
If your business is struggling with any payroll tax issues, give the team of experienced tax resolutions specialists at Bullseye Tax Relief a call today at (844) 582-3323! We offer a free initial consultation and transcript analysis for new clients!