The Many Tax Responsibilities Employers Have For Employees

Posted on March 11, 2015

Payroll servicesIf taxes were as easy as we all wish that they were, then there wouldn’t be a thriving industry of tax and payroll services professionals who make it their job to provide those services to their clients. The bleak reality of the world we live in is that, yes, taxes can often get very complicated. That’s fine, however, because no matter how confusing or convoluted tax law might get at any one point in time, we here at abc Payroll make it our business to know the ins and outs of even the most convoluted tax systems faced by employers of all sizes.

As a provider of tax & payroll services, we are well aware of the little details that make up the many tax responsibilities employers have for their employees. We have to be in order to be the highest-quality payroll company that our customers expect us to be. Federal Taxes, State Taxes, and even Unemployment Taxes are all serious financial and legal obligations which largely allow for no mistakes, which is why our persistent application of due diligence has given us the reputation of being one of the best Massachusetts-based payroll companies.

Here is a brief summary of our obligations to all of our clients:

When it comes to federal income taxes, everything is governed by the form W-4, which is filled out by each employee upon hire or upon a request for revision. This form is known as the “Withholding Allowance Certificate”, and governs how much in taxes for that individual employee the company must deposit with the IRS on either a monthly or semi-weekly basis. The individualized nature of these forms means it can often be a daunting task to determine the correct amount of taxes which must be withheld & filed, as each employee’s allowances must be taken into account.

State taxes are a completely different matter, especially when it comes to businesses that retain a permanent business presence in multiple states. Each state has the ability to make their own tax structure unique – some don’t even have an income tax at all! Remittance of these tax obligations go directly to the state agency in charge of taxes, and not to the IRS. It is easy to see how state taxes and laws surrounding them can easily serve to complicate further the task of properly accounting for the tax dues of even the smallest business.

Moving on, we encounter the third entry in the tax trifecta: unemployment taxes. These taxes are actually two taxes in one. Employers are responsible for paying both SUI, or State Unemployment Insurance tax, in addition to a Federal Unemployment Tax. These taxes, as we all know, are used to fund state and federal unemployment programs. Here is where things get tricky. States typically issue tax rates to employers once a year, federal tax rates are based off of wages paid during the quarter, and must be paid quarterly for all tax dues over $500.

After all that is taken care of, our responsibilities as a chosen Lowell and Boston-area payroll services provider aren’t over yet – all this data still has to be reported on IRS form 941, the “Employer’s Quarterly Federal Tax Return”, as well as state filing requirements. Then, at the end of the year, the W-2 forms for each employee need to be created and processed. If all of this seems like a daunting task to take on by yourself – call us! We are here to take care of your tax and payroll services needs so that you can get back to doing what you do best, and that is taking care of business!

Call us today at 978-251-3003 to learn more!