Payroll is the total amount of money paid by a business to its employees over a set amount of time. Or The distribution of paychecks (physical or electronic) to employees each payday, as in “I finished doing payroll yesterday.” Or The financial records for employee wages/salaries, withholding, deductions, bonuses, pay for time not worked (holidays, vacations, sick time, etc.) and other items on employee paychecks.
What Are Payroll Taxes?
Any tax levied by a government agency on employees’ wages, tips, and other compensation. The amounts withheld by employers from employees’ pay for federal income, social security, and Medicare taxes are considered as trust fund taxes. They are referred to as trust fund taxes because the money is held in a special trust fund for the U.S. government. Amounts withheld for state and local income taxes are held in trust for the state or local government.
Reporting and depositing payroll taxes to the appropriate agency in an accurate and timely manner is vital to your business. Late or inaccurate deposits may result in penalties and interest charges. These complex payroll tax requirements may seem intimidating but by learning a few simple concepts, you will be able to understand your payroll responsibilities and choose the best method for meeting them.