Hiring employees is an exciting milestone for small and growing businesses. But managing withholding and payroll taxes takes time and expertise you don’t have.
Withholding and remitting federal, state and local income taxes, Social Security and Medicare taxes and unemployment taxes, along with managing benefits, becomes overwhelming as businesses grow.
You should consult a professional and reliable payroll service provider (like us!). But you should keep a few other things in mind.
Every employer needs an EIN number, and employees need to fill out several forms before they begin work:
Tax regulations vary from state to state. So be sure to check with your local government for the latest employer tax guide and regulations. For example, California has four state payroll taxes.
When calculating payroll taxes, make sure to use the most up-to-date tax rate. For 2017, the Social Security tax rate did not change from 2016 (6.2 percent for employer and employee). And the Medicare tax rate also remains the same at 1.45 percent for each. IRS.gov offers additional federal tax rate guidelines.
Withholding errors or missed deadlines can cause additional fees and penalties. Avoid payroll tax penalties by keeping up with employment tax due dates on the IRS website.
Fortunately, a professional payroll service provider can help you keep track of deadlines, automate payments electronically, and submit payments on your behalf.
Employer tax credits can save your business thousands of dollars each year with new and existing tax credits. For 2017, a few specific areas can save you a tremendous amount of money.
With the tax year half over, you should get organized and ensure tax planning includes the latest savings opportunities. But by claiming these credits and write-offs, your company can increase cash flow, for one. And you can get on a firm path for growth and expansion throughout the rest of the year.
The 2017 tax guidelines can provide a significant cash flow opportunity for small businesses. And especially those that are in a growth phase and using new technologies, applying energy-efficiency standards or engaging in research and development. The government is continuously interested in stimulating innovation and the economy. So, you should expect more savings to be passed down to businesses in the future.