Before hiring employees, call the Internal Revenue Service and ask it to issue you an employer identification number. This will open an account for your business, and you will receive quarterly and annual tax forms. Call your state licensing department or agency as well, and ask to open accounts with its unemployment insurance agency and industrial insurance division. Ask employees to fill out W-4 forms when you hire them, and refer to the forms each time you write payroll checks. Fill out your forms, and pay your taxes on time.
When you receive unemployment tax forms from your state in the mail, multiply each employee's gross income for the applicable quarter by the percentage that your state has assigned to you based on your history of retaining or laying off employees.
Multiply each employee's gross earnings for each paycheck by .062 to calculate his social security tax deduction, and multiply it by .0145 to calculate his Medicare tax deduction. Subtract this amount from his paycheck. Set aside an equal amount from the business earnings to pay the employer's matching contribution.
When you receive your industrial insurance reporting forms from your state in the mail, multiply the number of hours that each employee has worked during the quarter by the number printed on your form. This number reflects the statistical risks faced by employees in your particular industry.
The federal government will send you income tax withholding tables when you set up your account. When you calculate each employee's weekly or bi-weekly earnings, find the appropriate column in the table and deduct that amount from his paycheck.
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