Everything Employers Should Know About Payroll Withholding
Learn what payroll withholding is and what it means for your small business’s payroll process.
A W-4 is an Internal Revenue slot online form your employees fill out to let you know how much to withhold from their paycheck for taxes.
You must also fill out Form 941 every quarter to report your payroll taxes.
For Medicare, the tax rate is 1.45% on the first $200,000 of wages. There is also a rate of 0.9% on Medicare wages over $200,000.
Managing your company’s payroll withholding is a legal obligation that requires you to assist your employees in paying a portion of their earnings as taxes to the government. As an employer, you do this by holding back a percentage of your employees’ wages that you then use to pay federal, state and local taxes.
With the help of tools like W-4 forms and payroll withholding tables, you can figure out how much to remit. A lot goes into managing payroll taxes, and doing it wrong can lead to fines and fees – which small businesses especially can do without.
Keep in mind that the W-4 form received a redesign in 2019. The new draft offers a simpler application template with a more accurate system to minimize the work of payroll processors and employers.
Your company’s payroll withholding tax is as integral to your business as compensating your employees, so it’s important to know the ins and outs of managing the payroll withholdings for your company. Here’s everything you should know as a small business owner.