Transcript for "jeff kuzmich - Migrate_OD_Beginners_Guide_Payroll_Taxes_02252025_4826767":
Hi there, I'm Robin Paul and I'm a Sales Learning Instructor with Paychex. I'm so excited to welcome you to A Beginner's Guide to Payroll Taxes. I do have to say as a legal disclaimer, this presentation does not constitute any legal or accounting advice and is for informational purposes only. So today what we're going to do is we're going to talk about payroll taxes. What they are, when they're paid, and how they're reconciled at different times of the year. And at the end, we'll talk about how paychecks can be a solution to help you handle all of these responsibilities. But before we begin, I've got a quick poll for you to take. You'll see it pop up on your screen. There's no right or wrong answer. I just want to figure out your comfort level with these taxes. Here's the poll. How well do you understand payroll tax responsibilities for your business? A. Not well. B. Just enough to understand that there could be serious consequences if I do it wrong. C. Well enough that I feel behind or overwhelmed at all the paperwork and the deadlines. Or D. Very well. I'm comfortable handling all the payroll taxes with little or outside guidance and confident I can meet all the duties and deadlines on my own. No matter what you answered, I'm going to make sure that you understand your payroll tax obligations as a business owner. So let's start by defining payroll taxes. Payroll taxes are federal and state taxes that are calculated based on an employee's taxable income. Simply put, payroll taxes ensure that employees and employers alike contribute to benefits that provide safety nets for health care, retirement, and unemployment. Payroll taxes also fund essential programs that support millions of people just like you and me every day. There are basically six payroll taxes. The first two are Social Security and Medicare and together you may know them as FICA. Social Security is a tax that's paid by both the employee and the employer and it provides benefits for retirees, those with disabilities, and their dependents. It's 6.2% of your earnings up to a maximum of 176,100. So really what that means is that if you make $180,000 a year, only the first 176,100 is taxed for Social Security. Medicare is the other tax that makes a FICA and it provides medical benefits for individuals aged 65 and older. It's 1.45% of your earnings. So that's FICA. Next are the two income taxes: federal and state and they're both based on the amount of income an employee makes. They're used to finance sectors like defense and social programs and law enforcement And as you can see, the rates vary. The more you make, the more you end up paying. Federal income tax ranges from 10 to about 37%. State income tax varies by state. There are some states that have no state income tax, like Florida or Texas, and there are some that can be as high as close to 15%. And finally, there's the two unemployment taxes: SUI and FUDA, and they fund a program that makes it possible for us all to claim unemployment benefits if we get laid off. The state unemployment tax, also known as SUI or State Unemployment Insurance, is a tax that can be as low as 0% or as high as 15%. But here's the key: you as a business owner can control that rate. Basically, here's how it works: as a business, the more people you lay off, the more you are sending to the unemployment office in that state to claim benefits, the more you are causing that fund in that state to get depleted, the more you got to put back in. So in a nutshell, the more involuntary unemployment you have, the higher that rate becomes. The federal unemployment tax, or FUDA, is 0.6% of the first $7,000 paid to an employee in a year. So assuming an employee makes at least $7,000 that tax works out to be $7,000 by 0.6% is $42 FUDO is paid by the employer, and so is SUI for the most part. However, in some States, it's shared between the employee and the employer, and that's SUI. So that's the six payroll taxes. Let's talk about what your responsibilities are as a business owner. As an employer, you're required to calculate the various withholding taxes and then deduct them from the employee's cheque. You're also required to deposit the various payroll taxes when they're due to the IRS and the State. And then you're also required to file quarterly and annual returns to reconcile all of these taxes both to the federal and the state. Now that we've covered what your tax responsibilities are, let's talk about when they're paid. These five taxes your Social Security and the Medicare from the employee as well as the employer and the federal income tax they're all due as a single payment to the IRS on a monthly basis. So essentially that would be 12 deposits a year. If you're a new business, you pay those taxes every month on the fifteenth of every month. And then as you grow, you could become what the IRS calls a semi weekly depositor, and then those taxes are due more often. So the more tax you incur, the quicker they want it. The state income tax is paid depending on your state's rules, and it could be quarterly, monthly, or weekly. The suing tax is paid once every quarter, and your funeral tax as well is paid every quarter only if it's over $500 So if it isn't, it's rolled into the new quarter until that gets to over $500 and then that too is paid once every quarter. And then finally, you've got to reconcile all of these taxes on some returns quarterly and annually, telling the IRS essentially and the state, Here's what I owe you. Here's what I gave you. Hopefully the two numbers should match. That's what the government calls a reconciliation. So these five taxes right over here, the Social Security, the Medicare from the employee and the employer, and the federal income tax are all reconciled on a form called the nine forty one once every quarter. The state income tax is reconciled on the state form once a quarter as well. And then the SUI tax is reconciled on the state form also once a quarter. And then your FUDA tax is reconciled on a form called the nine forty once at the end of the year. And just when you think you're done, in this example, if you've got six employees paid weekly, you've got to give them each a W-two, so that will be six W-2s at the end of the year. And then you've got to summarize all of that on a form called the W3 at the end of the year. So, just to summarize all of that, as you can see, if you're a business owner with six employees in that year, you would have had to make 52 plus 12, that's 64, plus $8.72 tax deposits at the minimum, and then file four threes of 12, plus six, eighteen, one, nineteen, 20. 20 tax returns just to state compliant. That's a lot. But that's exactly what we do at Paychex. We do all of this and much more so that you can focus on growing your business and following your dream. So let's recap what you learned today. There's the six payroll taxes. There's Social Security, Medicare, which is your FICA. Your two income taxes, your federal and your state. And then your two unemployment taxes, your SUI and your FUDA. You need to calculate and deduct those taxes from your employee's payroll, and some of those come out of your own pocket. You also have to pay them at different times of the year, and then finally throughout the year, you have to reconcile all of that on various returns. That's a lot! I hope all of this, or through all of this, I made you curious about what Paychex really does. Paychex, you see, is a human capital management solution. And what I mean by that is that we're a total business solution. We do everything from hire to retire when it comes to managing your people. Our mission is to provide you with the freedom to succeed. If you own a bakery, we want you to focus on baking and on your customers. We'll help you find good quality talent and provide you with world class benefits to retain your talent and keep them happy and productive and will even give you access to financial solutions so that you can not only survive but thrive. Yes, payroll can be time consuming, but we make it simpler. As a business owner, your focus should only be on what you do best, which is growing your brand and keeping your customers happy. Let us handle the complexities of payroll taxes so that to make sure that you stay compliant and avoid penalties. Okay, folks, we've got one more quick poll for you to take and you'll see it pop up on your screen. If you'd like to speak with a paycheck sales professional about how we can support your business, click Yes to the poll and one of our team members will reach out to you within the next business day. Thank you once again for joining me on this webinar, A Beginner's Guide to Payroll Taxes. As a reminder, you can download and save a PDF of today's presentation from the Files and Resources window at the top right side of your screen. You'll also find a number of other helpful resources, including our Essential Guide for Business Owners, a video demo, an online article for employers, and much more. And finally, a brief survey will pop up at the close of the session, and we welcome any feedback you have to help us improve future webinars and resources we're creating for your business. Thanks for joining us, and have a wonderful day.