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Advisor Name, designations
Financial Professional
Prudential Advisors
236 Broadway
Menands, NY 12204
Phone: 800-243-5334
Fax: 800-720-0780
Email: sales@ltmclientmarketing.com
Website: letstalkfinancialwellness.com
Sole proprietors who decide to add employees need to understand payroll taxes. As an employer, you are expected to withhold and pay federal payroll taxes. And if your employees work in a state with state income tax, you’ll need to withhold those too.
As an employer, you’ll pay the federal unemployment tax which is 6% on the first $7,000 of each employee’s earnings. For high earning employees, you must withhold the Additional Medicare Tax which is 0.9% of wages in excess of $200,000 in a year.
Based upon your employee’s Form W-4 inputs, you’ll need to withhold federal income tax from their wages. The amount to withhold depends on things like tax filing status, number of dependents and whether the employee has multiple jobs.
Most states require the employer to pay a state unemployment tax. This tax rate varies so check with your local taxing authority to find your rate. Keep in mind some states also require employees to pay the state unemployment tax so this may need to be withheld from your employee’s paycheck.
Lastly, some cities, towns, and other local governments impose a payroll tax. Consult your tax advisor to make sure you are paying all required taxes correctly.
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