12.2.3 State Income Tax Withholding State Income Tax withheld is computed differently depending on your state. Some states use a straight percentage, some include withholding allowances. Consult your accountant to determine the proper procedures for your state. 12.2.4. Local Income Tax Withholding Your employees may be subject to local income tax withholding depending on your business location, your employees’ residences, or your customers’ residences. Be sure to contact your city treasurer’s office for registration, rates, and payment requirements (if you service several cities, contact all of them). Be sure to consult your accountant about the regulations in your particular location. 12.3 Issuing Paychecks After withholding the proper federal, state, and local taxes, the paycheck may be issued. It is very helpful to itemize all deductions on the paycheck stub. This makes clear to your employees how much you are actually paying them. Sometimes employees think that their net pay is all that you are paying they don’t realize how much you are withholding in taxes, or the fact that you are paying additional social security and Medicare taxes for them. 12.4 Compute Employer Taxes In addition to amounts withheld from employee paychecks, employers are also required to pay employer taxes: the employer portion of Social Security and Medicare taxes, Federal and State Unemployment taxes, and in some states or cities, additional taxes of various sorts. Federal Unemployment Tax (FUTA) is based only on the first $7,000 of earnings for each employee in each calendar year. Ask your accountant if your state has a modified Federal Unemployment Tax rate. State Unemployment Tax (SUTA) varies depending on your state and the experience rating factor for your business. Ask your accountant for the details in your state. 12.5 Deposit Taxes Payable 12.5.1. Federal Taxes Payable You must deposit Federal Taxes Payable using Form 8109 (Federal Tax Deposit Coupon). All of the following amounts must be included: Federal Income Tax Withheld Social Security and Medicare Tax Withheld Employer Matching Social Security and Medicare Tax Payments
MOLLY MAID General Operations Manual Copyright 2015, Molly Maid, Inc.
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