I had a question recently from a small business owner who was looking at the IRS Small Business Tax Calendar. She wanted to know the difference between the "monthly deposit rule" and the "semi-weekly deposit rule." Here is the answer:

• First, the IRS wants you to find your total employment tax liability (Social Security/Medicare) for the "look back period" (the twelve-month period ending on June 30th)
  
• If you are a new employer and you did not have employees during this "look back" period, you are a monthly depositor
  
• If your total payroll taxes for the "look back period" were $50,000 or less, you are a monthly depositor
  
• If your total payroll taxes for the "look back period" were more than $50,000, you make deposits on the semi-monthly schedule.

To further clarify, monthly deposits must be made by the 15th day of the following month. So your payroll deposit for March must be made by April 15.

Semi-weekly deposits are made on the following schedule:

• Deposit taxes from payrolls paid on Saturday, Sunday, Monday or Tuesday by the following Friday
  
• Deposit taxes from payrolls paid on Wednesday, Thursday or Friday by the following Wednesday.

One more note: If your deposit date falls on a national or state holiday, make your deposit on the next business day.

When you set up the payroll system for your business, don't forget these important dates.