Taxes and withholdings

Income Tax: Corporation

The taxable income is paid by the individual partners

W4 Form

Employee withholding allowance certificate. When you hire employees to work for you, they will need to fill out a W-4 form to let you, as employer, know how much the withhold from their paychecks.

various deductions

Federal income tax. Social Security tax. Medicare tax. Federal unemployment insurance (FUTA). State income tax. State unemployment insurance (SUTA). State disability. Various local tax withholding such a city, county or school district Taxes

Employer payroll taxes

Your company is responsible for paying a portion of payroll taxes. The employer portion of payroll taxes include the following: Social Security taxes: 6.2% of wages up to the annual maximum $110,100 .00 for 2012, with COLA for later years. Medicare taxes: 1.45% of wages. No annual maximum

Payroll taxes

If you have employees, you will need to report payroll by calculating gross pay in various payroll deductions to arrive at their net pay. If you do not hire a payroll company to handle this aspect of your business, you will certainly need a computer program that has payroll features. QuickBooks is a good example of such a program.

Income tax: Partnership

A partnership is not a taxable entity. It is treated as a disregard entity, and the taxable income passes to the individual partners. The partnership is required to file: IRS form 1065: No taxes do with these forms. IRS schedule K1: Income in credits to be included with the individual

Income tax: Sole proprietorship

A sole proprietorship is considered to be a component of the individuals personal tax situation. Required forms: Schedule C (business). Form 1040 (individual). Schedule SE (self-employment tax), only if you're not earnings are more than $400 .00

Reporting payroll taxes

Employers are required toEmployers are required to report their payroll tax and to deposit payroll taxes in a timely manner. Reporting requirements include: Making federal tax deposits. Annual federal unemployment tax return (form 940 or 940EZ). Employers quarterly payroll tax return (form 941). Annual return of withheld federal income tax (form 945). Wage and tax statements (form W-2)

FICA taxes

FICA stands for the federal insurance contributions act. The FICA tax consist of both Social Security and Medicare taxes.

Payroll deductions

Payroll deductions must be withheld from employees paycheck. This is required by law. Employers must hand these withholdings over to various tax agencies.

independent contractors

Increased staffing flexibility. Reduced employee benefit cost eliminates the employers responsibility for paying: Income tax withholding (federal and state). Social Security taxes. Medicare taxes. Unemployment taxes (federal and state). Face with income under reporting and the subsequent loss of tax revenues, the IRS is turning up the heat on companies that missed classified employees as independent contractors. the employer has the right to only control or direct the results of the work, and not the means and methods of accomplishing the result.

Voluntary payroll deductions

Voluntary payroll deductions are withheld from an employees paycheck only if employee has agreed to the deductions. Here are some examples: Health insurance plan such as medical, dental or eye care. Life insurance premiums. Retirement plan such as a 401K. Employee stock purchase plans. Meals, uniforms, union dues or other job related expenses. These deductions can be paid with pretax dollars or after-tax dollars, depending on the type of benefit being deducted.

classify worker

the IRS considers 20 factory list that measures the degree of control the employer has over him or her: Does the person work solely for your organization? A worker who is free to perform work for other customers and regular provides services to other companies is more likely to qualify as an independent contractor. Can the worker set his or her own hours and leave when the job is complete? Allowing maximum flexibility of setting work hours helps to protect independent contractor status. The same holds true for the place of work. Does the person provide his own tools, equipment, and supplies? Can the work he demonstrates that he or she is in his or her own business? Business cards, stationery, and advertisements provide evidence that the individual runs his or her own separately establish business or trade. Most individuals and business have a federal player tax ID number (FIN/EIN). As for the EIN number as well as the workers social security number. Does the person invoice the company for payment? Be sure and independent contractor submit invoices to the company for payment and then keep copies of these invoices on file. Does a person receive training from the employer? Providing the worker with training or assigning in experienced employee to work with the worker points to and employer/employee relationship.