As a small business owner, it’s critical to understand what entities you need to pay as you add employees and grow your business. This can be tricky and complex! The following post comes from our Lead Accountant, Adrienne Kaylor, our resident expert of all things payroll.
Growing Your Small Business: What Entities Do You Need to Pay?
Most small businesses need to hire employees at some point, especially if they are looking to grow. As an employer, it is your responsibility to withhold certain taxes from employee’s paychecks and forward to the government on their behalf. There are also payroll taxes that you, as the employer, must pay. Here’s a list of government agencies you should be paying if you have employees.
941 Tax Deposits – form 941 is used to report the federal withholding, social security and medicare withheld from employee’s paychecks, as well as the employer portion of social security and medicare. The IRS requires employers submit these taxes electronically either monthly or semi-weekly, depending on your pre-determined schedule. The 941 form can be filed quarterly.
940 FUTA – form 940 is used to report & pay Federal Unemployment Tax. FUTA is paid entirely by the employer and is due annually, unless your liability during the year reaches $500. Once your liability reaches $500 for the year, you are required to deposit at the next quarterly due date.
WASUI – Here in Washington State, we pay unemployment insurance to the WA Employment Security Department. WASUI is paid entirely by the employer for each employee’s wages up to $47,300 (also called the Taxable Wage base for 2018) and is due quarterly.
If you are located outside of Washington, check with your state unemployment agency on their regulations and rates for your employees.
Workers Compensation Insurance
WA Labor & Industries – In Washington State, our workers compensation insurance is a state-sponsored program through WA Labor & Industries. Rates are determined by your risk class multiplied by hours worked and is due quarterly. You can deduct a portion of the premium from employee’s paychecks to reduce the employer burden.
Not all states require workers compensation. If it is a requirement in your state, check with the agency to determine if there is a state-sponsored program. If not, you can obtain a workers compensation through a private insurance carrier.
Are you an employer that needs help with these taxes? Joy Accounting has payroll tax specialists that would be happy to help you. Please call us at 425.213.4862!