For any small business that has employees, it is essential to file employee payroll taxes. Here are the steps.
Employers must report their business's taxable income to the IRS and pay federal taxes on employees.
These taxes include federal income taxes withholding, Social Security taxes, Medicare taxes, and unemployment taxes.
Each federal tax has its payment deadlines. You can also send the IRS forms. Employers are required to withhold payroll taxes and collect them, pay the IRS taxes and create reports about the taxes paid.
How to File Employee Payroll Taxes
Step 1: Fill out and submit IRS Form 941 (Employer’s Quarterly Income Tax Report) or IRS Form 93 (Employer’s Annual Federal Tax Return For Agriculture Employees).
To report tips and wages of employees, fill out Form 941 every quarter. Calculate the federal income tax and Medicare taxes that you will withhold from the IRS.
This form can be used to account for any other type of payment, such as COBRA continuation assistance or health insurance. After you have paid wages to your employees, Form 943 must be completed by January 31, 2019.
Send the completed form by the last day before each quarter's end.
Step 2: Fill out and submit IRS Form 940 to pay the Federal Unemployment Tax (FUTA).
Employers are required to pay the FUTA tax HTML if they pay more than $1,500 in employee wages or have more than one employee who worked more than 20 weeks. To submit tax due for the year, use Form 940.
Employers must calculate the FUTA tax owed each month and submit payment once the cumulative annual amount reaches 500. Employers who owe less than $500 in FUTA tax after one quarter can carry that forward into the next quarter until they reach $500.
Step 3: Register for Electronic Federal Tax Payment System
Employers must use EFTPS to pay their taxes. Mailing checks is prohibited. To create an account, the employer must visit eftps.gov if the IRS hasn't automatically enrolled them in EFTPS. Click the "Enroll" button and then select "Business".
EFTPS registration requires an employer identification number and a business bank account. Employers should enroll at least two weeks before the payment deadline to get a PIN for EFTPS.
Step 4: Submit tax payments.
EFTPS can be used to pay Social Security taxes, Social Security taxes, and Unemployment taxes as determined on Forms 940-941 and 943.
When visiting eftps.gov:
- Click on "Make payment."
- Enter your EIN, PIN, and password.
- Make the payment.
The employer will receive a tracking number and the payment will be deducted from their bank account. The employer will receive a tracking number once the payment has been made.
Keep this information for future reference. EFTPS payments must be made by 8:00 p.m. EST on the day before the payment due to receive credit for taxes paid on time.
When should payroll taxes for employees be paid to the IRS?
Payroll taxes must be collected and paid to the IRS semi-weekly or monthly. The total amount of payroll taxes owed will determine the frequency at which you are required to remit taxes.
Employers who have fewer employees and a smaller payroll tax liability must pay taxes monthly. These taxes are paid semi-weekly by larger companies that have a greater payroll tax liability.
When is it best to make payroll tax deposits
Employers must deposit monthly funds by the 15th of each month following the month in which employees were paid. Employers who paid employees in January must deposit their money before February 15, or the next business day, if they want to pay them.
When making semiweekly deposits, employers must follow the following guidelines:
- Tax payments for payrolls that are paid between Saturday and Tuesday must be received by Friday.
- Tax payments for payrolls that are paid between Wednesday and Friday must be made by Wednesday.
Employers with a minimum $100,000 payroll tax obligation must make a payroll deposit within the next day. Employers must continue to make next-day deposits throughout the year.
At the end of each quarter, employers must submit Form 941 tax reports on the payroll. For payroll tax deposits that are paid on time and in full, Form 941 may be submitted by the 10th day of the next month. Employers with a tax liability greater than $500 must submit federal unemployment tax deposits no later than the end of each quarter.
Employers are required to submit their FUTA tax reports and tax deposits for the preceding year by January 31st. The deadline to pay tax deposits that are current and fully paid is the 10th day of the following month.
Reporting due dates
Employers are required to file these reports by January 31st
- Form 940, Employer’s Annual Federal Unemployment Tax Return (FUTA).
- Form 941, Employer’s Quarterly Federal Tax Return, (along with April 30, July 31 & October 31)
- Form 943, Annual Federal Tax Return of the Employer for Agri-Employes
- Form 944, Annual Federal Tax Return of the Employer
- Form 945, Annual Return on Withheld Federal Income Tax
- Form W-2, Wage & Tax Statement
- Form 1099, Miscellaneous Income
Employers are required to file the following reports before February 28th:
- Copie A of Form 1099 on paper, along with Form 1096 Annual Summary and Transmittal U.S.
- Information returns Paper Form 8027, Employer’s Annual Information Return for Tip Income and Allocated Tipping
- The following reports must be filed by employers by March 31
- Form 1099, Miscellaneous Income
- Electronic Form 8027, Employer’s Annual Information Return for Tip Income and Allocated Tipping
Software For Processing Payroll
Many payroll processing software applications are available for businesses. Here are five top-rated payroll software options.
Paychex, a cloud-hosted and fully-featured payroll system that allows large businesses to manage payroll processing and tax obligations is. Flexible payroll options are available, including biweekly, weekly, semimonthly, and monthly options.
It can manage full-time workers, part-time W-2 workers, and 1099 contractors. Paychex can accept multiple payment methods, such as direct deposit, paper checks, and prepaid debit cards.
Your company logo can also be used to brand the app. Paychex's mobile app allows payroll management on both Android and iOS devices. Employees can view their pay stubs as well as year-end tax documents. Paychex offers three pricing options to suit different businesses.
Intuit QuickBooks Payroll
Intuit Quickbooks Payroll is a great option for small businesses. It offers scalable payroll services, collects payroll taxes, and offers many tools and features.
All plans are compatible with QuickBooks software. There are three pricing options available for the Online Payroll and Desktop Payroll plans.
Rippling, an online payroll solution has a user-friendly interface. It supports more than 400 applications for payroll processing, tax preparation, and accounting.
The software automates payroll processing and automatically withholds tax based on an employee's tax status. Payroll processing is possible in as little as 90 seconds.
The dashboard contains key metrics such as time worked per employee and paid time off. It also shows total labor expenses. Rippling allows for both paper and direct deposits.
OnPay allows businesses to create unlimited monthly payrolls using an easy-to-use online payroll software program. It can be used for direct deposit or paper checks.
This service provides a payroll tax and benefits withholding system, payroll preparation, and tracking of the most recent forms. Recently, the company updated its reporting capabilities to allow for custom expense reports. OnPay offers a single pricing plan that applies to all businesses.
There is a charge for mailing year-end tax forms. The company will pay for any fines resulting from filing or payment mistakes.
ADP is a scalable platform for payroll processing that can support businesses with more complex needs, such as those in highly regulated industries or across borders. There are four pricing options and payroll platforms available.
The most basic plan offers an employee self-service portal, direct deposit payments support, prepaid debit cards and paper checks, and HR tools. ADP allows for payroll processing on mobile and desktop devices. It will also automate many payroll tasks. It integrates with other services, such as time and attendance software.