What Payroll Taxes Do US Small Businesses Need to Pay?

For US small businesses, managing payroll taxes is more than just a compliance requirement—it’s essential for keeping your business financially healthy and ensuring your employees’ benefits are protected. Understanding which payroll taxes in the US you need to pay, how they’re calculated, and when they’re due can prevent costly penalties.

Professional accounting and payroll services in US can simplify payroll management, help maintain compliance with federal and state regulations, and allow you to focus on growing your business.

1. Key Federal Payroll Taxes for Small Businesses

Employers are responsible for several federal payroll taxes that fund Social Security, Medicare, and unemployment benefits. Here’s a breakdown based on the latest IRS guidelines for 2025:

1.1 Social Security Tax

• Employers and employees each pay 6.2% on wages up to $176,100.

• These contributions fund retirement, disability, and survivor benefits.

1.2 Medicare Tax

• Employers and employees each pay 1.45% on all wages.

• Employees earning over $200,000 pay an additional 0.9% surtax.

1.3 Federal Unemployment Tax Act (FUTA) Tax

• Employers pay 0.6% on the first $7,000 of each employee’s wages.

• FUTA funds unemployment benefits for workers who lose their jobs.

1.4 Federal Income Tax Withholding

• Employers must withhold federal income tax from employee wages based on Form W-4 and IRS withholding tables.

1.5 Self-Employment Tax

• Self-employed individuals pay 15.3%, covering Social Security (12.4%) and Medicare (2.9%).

• Wage limits and surtax rules are the same as for employees.

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2. Reporting and Filing Payroll Taxes

2.1 IRS Forms

• Form 941: Quarterly payroll tax return.

• Form 940: Annual FUTA tax return.

2.2 State and Local Payroll Taxes

• Employers must comply with state income tax withholding and unemployment insurance taxes, administered separately by state agencies.

2.3 Why Compliance Matters

• The IRS enforces payroll tax obligations with audits, penalties, and legal actions for failure to collect or remit taxes.

• Timely and accurate filing prevents financial and legal complications.

3. How Accounting Services Can Help

Managing payroll taxes can be complex, but professional accounting services in the US can provide support in several ways:

• Accurate Calculations: Ensure Social Security, Medicare, FUTA, and income tax withholding are correctly calculated for every employee.

• Timely Filing: Meet federal, state, and local deadlines to avoid penalties and interest.

• Payroll Automation: Streamline payroll processing and maintain accurate employee records.

• Tax Planning Advice: Optimize tax payments, plan for self-employment taxes, and identify potential credits or deductions.

By leveraging professional guidance, small business owners can reduce risk, maintain compliance, and free up time to focus on business growth.

Summary

US small businesses have multiple payroll tax obligations, including Social Security, Medicare, FUTA, federal income tax withholding, and self-employment tax. Accurate calculation, timely filing, and compliance are crucial to avoid penalties and protect your business. Professional accounting services can simplify payroll management, provide tax guidance, and ensure your business meets federal and state payroll requirements. Staying informed and proactive helps small business owners maintain financial stability and focus on long-term growth.

Complete Payroll Management Service 

Don’t let payroll complexity slow you down. Our team handles everything—from employee payments to tax deposits and filings. We manage compliance deadlines, calculate withholdings, and ensure timely payments. Plus, your payroll seamlessly syncs with your books.

Unlike firms that outsource to third-party providers, we handle your payroll in-house. Get expert support and direct access to your Customer Success Manager via SMS for any questions.

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