15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

How Payroll Taxes Apply to Employees

Small business owners, take heed: there inevitably comes a time when you’ll be confronted with the complexities of payroll taxes.

The responsibility of defining your tax situation falls to you as an employer. You’ll need to determine what percentage of compensation is taxable, whatever payroll taxes are applicable, how frequently tax payments are required and also how those payments need to be fulfilled.

Many components affect your payroll taxes. Taxes that you’re required to withhold and those that you’re responsible for paying directly together determine payroll taxes. These taxes may arrive in any of the following forms …

  • Federal
  • State
  • Local income taxes
  • Social Security
  • Medicare
  • Unemployment
  • Disability Insurance (Where applicable)

It’s important to note that some payroll taxes are applicable to your business whether you actually have employees or not. Managing your payroll obligations requires due diligence — you’ll need to make note of which workers are classified as taxable employees, what varieties of compensation are taxed, and if self-employment taxes apply to your revenue.

So who are your taxable workers? You’ll need to determine this before addressing your payroll tax liability, but the answer first varies on location. Federal and state laws provide their own definitions regarding payroll taxes.

The one governing law to operate under, however, is in accordance with common law rules — classification of a worker as either an employee in contract or an independent contractor. Making this distinction can actually prove incredibly difficult for employers.

Common law rules stipulate that workers must be defined as employees if the employer has the ability to dictate how they complete their work, rather than solely expecting specific results. Under the law, some independent contractors are taxable as employees provided they fulfill certain duties of the job. Some employees can also be regarded as nontaxable contractors, such as real estate agents and other service providers.

Whether you deal with it directly or outsource your payroll services, there is virtually no getting around the payroll tax. Failing to withhold taxes from employees’ wages and depositing these amounts through applicable tax agencies can introduce serious penalties — penalties that can threaten the stability of your business.

You have an endless list of things that demand your attention as a small business owner. From processing orders to delivering the final product, it’s a constant shuffle. Considering how important and time-consuming taxes are to small business, is it really any mystery why so many employers elect to outsource their payroll services?

Accounting Taxes Payroll Partners can bring you answers. Specializing in the needs of small businesses, ATPP provides dynamic service with knowledgeable everyday solutions. Contact us today at 818-436-2775 for additional info, or visit our official site here.