If you are having an employee in the business, then proper maintenance of the payroll system is important. Payroll taxes are certainly an important aspect of any payroll system. If your business is operating in the US then you need to understand their payroll tax system properly. The payroll tax deductions must be done in an accurate way to avoid any further hassles. We will discuss here in detail calculating the payroll taxes, FICA taxes, Social Security tax, etc.
 How to calculate payroll taxes?
Small businesses particularly find it difficult to calculate the payroll taxes in the payroll system.
Here we list some simple steps to calculate payroll taxes:
- Calculating the gross pay of the employee
The first step is calculating the gross pay of the employee properly. After understanding the gross pay, it becomes clear for proper calculations of the payroll taxes.
Federal Withholding calculations
As per the IRS Form W-4, it is important to understand the withholding certificate of the employees. This helps to FICA taxes and Social Security tax applicable. There are some simple methods to calculate the withholding of the employee.
 Proper FICA taxes calculations
The employer and employee both are applicable for the FICA taxes. The FICA taxes are the sum of the social security tax and the Medicare. Not all are liable for the FICA taxes, a person above a specific salary is liable for these taxes. It is the responsibility of the employer to comply with the FICA taxes properly.
 Calculation of the state and local taxes
A person living and working in the US is responsible for the state and local taxes. However, some of the states like Alaska, South Dakota, etc. have no state taxes deductions.
 Subtracting all the payroll tax deductions
Proper calculations of all the payroll tax deductions must be done. Afterward all the payroll tax deductions must be subtracted from the payments as the taxes.
 Addition of the reimbursement applicable
All the reimbursement expenses must be added to the gross pay of the employee. These reimbursements will vary as per the criteria of the employee.
 Calculation of FUTA
After calculating the withholding taxes, you must calculate the FUTA taxes applicable. These FUTA taxes can vary with the next financial year.
 Calculation of SUTA
SUTA is the state unemployment tax that depends on the former employees who file unemployment benefits. The SUTA taxes are different for different states.
 Total tax payments
After the calculations of the total tax deductions, they must be deducted from the salary. It is the employer’s responsibility to comply with the tax deductions of the employee.
 These are some of the simple steps to calculate payroll taxes in the US. Considering all the important aspects of the taxes is primarily important here. It is not always possible for small businesses to make the proper calculations of payroll taxes. So, it is better to appoint an expert consultant or any proficient agency which can handle the payroll tax calculations of your business.
Meru Accounting provides payroll taxes calculations services for the business. It will help the business to relieve from the complexities of the payroll taxes in the business. The company has expert people who know about payroll tax deductions. Meru Accounting is a popular accounting service providing agency with clients all over the world.
 Infographics Summary:
What are the steps to calculate payroll taxes for your business? While calculating the payroll taxes of the business, it is important to consider the different aspects of it.
Benefits of outsourcing payroll tax calculations:
– It provides relief for business owners to focus on business
– Calculating the taxes considering all the rules
– Maintain a better payroll system
– Bring accuracy in the payroll tax calculations
A stepwise calculation of the payroll taxes can bring efficiency in the accounting for the business.
