Question

In: Accounting

Outline how a small business might process payroll and electronically pay it's payroll taxes and file...

Outline how a small business might process payroll and electronically pay it's payroll taxes and file the related IRS forms.

Solutions

Expert Solution

Payroll taxes are federal, state and local taxes withheld from an employee’s paycheck by the employer. They include Income Tax, Social Security, and Medicare. In order to properly calculate what your payroll tax should be, you need to know the current tax rates.

These are the forms to be filed by the business to the IRS for processing of payroll taxes returns

Form W-2

Form W-2, Wage and Tax Statement, reports the taxes you withheld from employee wages to the IRS.

Form W-3

Form W-3, Transmittal of Wage and Tax Statements, summarizes information from Forms W-2. Send Form W-3 along with Forms W-2 to the SSA.

Form 941

Employer's Quarterly Federal Tax Return, is the form employers use to report payroll taxes and employee wages. This form reports federal income and FICA taxes (SocialSecurity and Medicare) to the IRS each quarter.

Form 944

Employer's Annual Federal Tax Return, is for smaller businesses that report federal income taxes and FICA taxes annually,rather than quarterly.

Form W-4

Employee's Withholding Certificate,determines the amount of federal income tax to withhold from an employee's wages. When you hire a new employee, have them fill out W-4


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