When it comes time to process payroll, there are several tasks you must carry out in processing the regular employee payroll and paying and reporting payroll taxes. The information provided does not pertain to independent contractors you hire to work for you from time to time.
What You Need To Do When Processing Payroll
In order to process the payroll, you will need to put together each employee’s paycheck. This is done by doing the following:
- Determine the employee’s gross pay (using their hourly or salary wage)
- You’ll need to deal with the deductions – federal income tax (Medicare and Social Security), state tax deductions and voluntary deductions (health, vision, dental, life, etc.)
An equal amount of Medicare and Social Security is required to be taken out and you’ll need to total the state and federal withholding for every employee.
Make Payroll Tax Deposits
The payroll size you have will determine whether you make a monthly or semi-weekly payroll tax deposits so the IRS. And, these tax deposits for the following:
- Amount withheld from employees paycheck for state and federal income taxes
- Amount withheld from employees to pay for both Medicare and Social Security
- Amounts you’ll owe for both Medicare and Social Security
You can make these deposits in one of two ways:
- Use the IRS electronic filing system
- Form 8109
A Look At Other Payroll Tax Deposits
Besides withholding federal, Medicare and Social Security taxes, you’ll need to do the following:
- Regularly send federal unemployment tax payments
- Send state, federal and possible local payroll tax deposits
Reporting Of Payroll Tax
Companies must regularly submit payroll tax reports. Therefore, they must do the following tasks:
- Turn in worker’s compensation and state unemployment reports.
- File Form 940 on an annual basis. This form is likely required by the IRS if you have employees.
- Turn in the Form 941 on a quarterly basis. This form will show the amount of the payroll tax liability and the amount paid on it during the prior quarter.
- Turn in the Form 944 to the IRS for the yearly unemployment tax that shows how much unemployment tax liability you must pay and the amount already paid on it.