Every small business who has employees even if you are the only employee is required to pay payroll taxes. Payroll taxes must be paid and the appropriate payroll tax forms filed on a regular basis. That could mean weekly, monthly, quarterly and/or annually. Are you paying your taxes on time and filing the correct returns on a regular basis? Here's a quick checklist:
- Federal Income Tax Withholding: withheld from employee’s paycheck
- State Income Tax Withholding: withheld from employee’s paycheck
- Social Security & Medicare Tax Withholding: Paid by both the employee and the employer (employee portion withheld from their paycheck & employer portion paid in separately)
- State & Federal Unemployment: Paid by employer
PAYROLL TAX REPORTING FORMS
- Form 941: To report federal income, social security, and Medicare taxes
- Form 940: To report federal unemployment taxes
- UC-1 and UC-5: To report State of Indiana unemployment taxes
- WH-1: To report State of Indiana income tax withholding
ADDITIONAL FORMS (created annually after fiscal year end)
- W-2: To detail employee earnings for the year
- W-3: Transmittal form of wages & taxes that accompanies the W-2 forms to the IRS
- WH-3: Reconciliation of state & local county income tax withheld over the year to the State of Indiana
Federal income tax, social security and Medicare tax (Form 941) as well as state income tax (Form WH-1) are typically paid at the end of each month, but this can vary depending on the frequency of your payroll. When you set up your accounts with the IRS and State of Indiana each entity will give you a payment schedule. But you should be paying these at least every month in order to avoid interest and penalties or worse!
A 941 Quarterly Return must also be filed four times per year - prior to March 15, April 30, October 31 and January 31. Even though you have been making payments monthly, you must still file this return quarterly. This gives you a chance each quarter to double check your payments and make sure you have not underpaid or overpaid.
Federal unemployment (Form 940) may be paid quarterly or annually. Again, the IRS will let you know your payment schedule. Payment and the return must be filed with the IRS.
State unemployment (Form UC-1 and UC-5) is usually paid quarterly. Payment and the return must be sent in together.
All payments and forms to the IRS and the State of Indiana are made electronically.
Federal payments – www.efpts.gov
State of Indiana payments – www.in.gov
If you are using QuickBooks software, then all of these taxes are calculated in the program and all of the forms can be filled out and printed from QuickBooks. Please contact your accountant for specific questions related to payroll taxes for your business.