Getting Started with Payroll and Employment Taxes
By Jean Murray
- Payroll Tax Basics - What Do Those Terms Mean?
- Before You Hire Your First Employee
- Writing Payroll, Recording Payroll Information
- Paying Payroll Taxes, Reporting Payroll Taxes
- Setting Up Your Payroll Processing System
- End of Year Payroll Tasks
- Employees vs. Independent Contractors
Payroll Tax Basics - What Do Those Terms Mean?
Before you get started with your payroll system, you need to know the terms used to describe payroll and payroll taxes. Knowing the terms will make it easier for you to understand how payroll and payroll taxes need to work.
- What are Payroll Taxes?
- Why are Payroll Taxes called "Trust Fund Taxes?"
- What's the Difference Between Payroll Taxes and Employment Taxes?
- What Employment Taxes Do I Need to Pay?
- State Payroll and Employment Taxes
Before You Hire Your First Employee
Let's begin with the first employee. Before you hire that person, you need to know your responsibilities as an employer and the paperwork needed for that hire.
- Your Responsibilities as an Employer
- Types of Employment Taxes
- Get an Employer ID
- Register as an Employer With Your State
- New Hire Paperwork
- Where to Find New Hire Forms and Paperwork
- Verify Employee Work Eligibility Using Form I-9, E-Verify
Writing Payroll, Recording Payroll Information
The process of writing paychecks and recording payroll information on a payroll register and employee earnings records.
- Making Decisions About Paying Employees
- Writing Paychecks for Salaried and Hourly Employees
- Calculating Deductions and Withholding
- Creating an Employee Earnings Record
- Create a Payroll Register
Paying Payroll Taxes, Reporting Payroll Taxes
A payroll tax system includes (1) making payroll tax deposits either semi-weekly or month (2) submitting quarterly payroll tax reports and annual unemployment tax reports, and (3) annual wage and tax statements to employees and
- Making Federal Payroll Tax Deposits
- Making Federal Unemployment Tax Deposits
- Federal Payroll Tax Reports on Form 941
- Annual Wage and Tax Statements to Employees, Social Security
Setting Up Your Payroll Processing System
After you have hired your first employee, you will need to make some decisions about payroll, including pay structure and frequency, and you will need to decide how to process payroll. We will discuss these decisions in this section.
End of Year Payroll Tasks
The end of a calendar year means reports due to employees and non-employees, and reporting for taxes. Tax information forms are due to employees and independent contractors by January 31 and to the appropriate federal agency by the end of February.
- Year-end Payroll Tasks - An Overview
- Filing Wage and Tax Reports for Employees and Contractors
- Which Form? W-2 or 1099-MISC?
- Form W-2 - Preparing, Distributing, Reporting
- Form 1099-MISC for Non-Employees
- Prepare and File Transmittal Forms - W-3 and 1096
Employees vs. Independent Contractors
One of the most confusing parts of paying workers is to know if these people are employees or independent contractors. Worker status determines how you pay and whether you withhold taxes. And the IRS wants to be sure you are classifying workers correctly.