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Four Payroll Tax Must Haves for Startup Companies


Becoming an employer means you’re now responsible for reporting and paying taxes on federal, state and local levels. If you don’t get up to speed starting with your very first hire, you might start receiving notices that result in penalties and interest payments.

Payroll experts in BenefitMall’s tax, sales and new account setup departments collaborated to provide four payroll tax musts new employers should know.

One: Payroll tax forms

Before you can begin paying your employees, you must complete required forms.

  • Form  I-9, Employment Eligibility Verification, is issued by the U.S. Citizenship and Immigration Services and documents that each employee is  authorized to work in the United States.  Employers are required to complete the form on or prior to each  employee’s date of hire and retain a completed I-9 for each employee (kept separate from the employee’s personnel records) and available for      government inspection.
  • Verify all Social Security Numbers (SSN) to ensure employment eligibility and avoid penalties for SSN  mismatches on tax filings. E-Verify, a free online SSN verification service, has been developed by the Department of Homeland Security for use by employers.
  • Form W-4 should be completed by each employee annually to determine the      appropriate amount of federal income tax withheld from wages. In a state with state income taxes, employees will also complete the state W-4.

Two: Federal taxes

Federal payroll taxes are filed and deposited with the Internal Revenue Service and include federal income tax, Social Security tax, Medicare tax and federal unemployment tax.

IRS Publication 15, Employer’s Tax Guide, is a great resource for keeping up with filing and payment deadlines.

Three: State taxes

Most states have a state income tax, a tax withheld from employees’ wages and paid to the appropriate state agency. Employers are also responsible for paying employer-only state taxes.  

In states that have income tax withholding requirements, you need to register as an employer and receive an identification number that will be used to report state income tax withheld on behalf of your employees.  

You also need to register to pay unemployment taxes. In some states, that will occur when you register to withhold taxes, but in other states you may need to register separately. Once registered, you will receive an identification number and a contribution rate that you will use to report quarterly taxable earnings and pay unemployment taxes.

A list of links to state websites can be found on the IRS and the American Payroll Association websites.

Four: Local taxes

There are a number of states with local income taxes. Employers in these states are required to register with the appropriate local agencies, withhold taxes from employee wages and/or pay employer portions of the taxes and file and pay the taxes to the taxing authority.

The American Payroll Association website has a helpful listing of links to local tax websites.

BenefitMall Is your payroll tax resource – for additional information, Complete our payroll quote request or call (800) 362-9519 to speak with a BenefitMall representative.

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