Payroll taxes are a type of tax that is taken from employers and employees. Most of the time, it involves a calculation and deduction based salaries paid by an employer, or in other words, employee wages. There are two main categories of payroll tax. Withholding tax, also known as pay-as-you-go tax or pay-as-you-earn tax, consists of taxes that employers are legally required to withhold from their employees’ wages. Withholding taxes are usually put towards income tax, social insurance, such as unemployment and disability, and social security contributions.
The second type of tax comes from the employer and is related to the employment of a worker. In some cases, the employer may pay a fixed charge. In others, the tax is proportionally related to the employee’s pay. These taxes may be put towards social security or other types of insurance programs. But in most cases, the heavier economic burden of payroll tax is the responsibility of the worker.
In the United States, payroll taxes are decided by the federal government and some of the fifty states, though not all states tax income. Municipal governments may also collect payroll taxes, but again, it depends on the jurisdictions.
Payroll Tax Programs
Payroll tax programs include software that allows employers to easily deduct taxes from employee wages. These types of applications interpret tax laws and regulations and apply them according to your company and employees’ location. They may also come with other useful payroll features, such as calculating wages, paying employees via direct deposit, or generating paychecks. These programs may be designed to fit the needs of businesses of sizes ranging from a single employee to hundreds of employees. Others target businesses in specific industries which may have unique wage calculation and/or payroll tax requirements.
Most payroll tax programs operate on a monthly subscription basis. Some charge additional monthly fees per employee. Some of the most popular programs include Wagepoint, Vista HRMS Payroll, QuickBooks, TimeCamp, Deltek Vision, ADP Vista HCM, Wave, WebPay, Paychex Flex, and Easy-Commission, among others.
QuickBooks Payroll Taxes
Intuit QuickBooks is one of the preferred accounting applications for small businesses. In the accounting world, Intuit has been a trusted name since the company’s first product was released in 1984. QuickBooks was first released in 2002. In 2013, the interface received a complete overhaul.
QuickBooks is an accounting tool that allows business owners to manage their finances, including payroll and payroll taxes. Features include check printing, compensation management, direct deposit, W-2 form preparation, tax regulations for numerous states, charts and reports, payroll support, multiple currencies, inventory capabilities, customizable invoices, and software integrations. But the software continues to evolve, and integrations, inventory bundles, auto bank rules, and packing slips are some examples of recently updated features. Though not every business owner needs all of QuickBooks’ features, many will find the extensive array of features useful.
QuickBooks offers a free, month-long trial for new users. The cost after the end of the trial is $12.95 per month for QuickBooks Online.