If you are a new business who is planning on hiring employees, you will need to register for payroll taxes. Payroll taxes are a legal requirement for hiring and paying employees in the United States.
All small businesses must track and report all payroll taxes to avoid government audits and fines.
Payroll taxes are incurred at the state and federal level. Employers must register for the appropriate tax accounts in order to hire employees, to process payroll, and to file returns.
While the process of registering for payroll taxes isn’t overly difficult, knowing what to register for can be overwhelming to new small business owners. Different states have different requirements and processing policies.
CorpNet is focused on helping entrepreneurs start their business and stay in compliance. We know payroll taxes can be one more item on a long list of growing start up requirements.
We want to help you succeed, so we offer payroll tax registration services in all 50 states. You can let us worry about business compliance, so you can worry about finding and hiring the staff you need to build your new business into a success.
State Unemployment Insurance Tax (SUI)
If you are planning to hire or have already hired employees, you are required to pay State Unemployment Insurance taxes (SUI) on their wages.
The SUI program offers short-term unemployment benefits to eligible workers who are unemployed because they have lost or left their jobs. Some of the reasons for leaving the job include being laid off, being fired for reasons other than misconduct, or leaving due to health or personal problems.
SUI eligibility and benefits are determined by the individual state’s laws. Employer taxes associated with SUI rates vary by state. They can also be scaled based on the number of unemployment claims associated with a business. Stated in other words, the more claims you file, the higher your tax rate becomes.
Once a small business registers for State Unemployment Insurance a tax is applied to employee paychecks. This means employers must register for the SUI tax early and before paying their first employee’s payroll.
CorpNet can help your business register for your State Unemployment Insurance account, which will save you time in researching state requirements, filing paperwork, and dealing with your state’s unemployment administration.
State Income Tax (SIT)
State Income Tax (SIT) is a required tax applied to an employee’s wages. Small business owners are responsible for deducting SIT from an employee’s gross wages and submitting this tax to the state’s tax agency.
All states require State Income Tax withholdings except for Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
State Income Tax is withheld from each paycheck and it is calculated using the employee’s pay,
The employee’s marital status, the employee’s state withholding allowance amount, and if applicable, any additional withholding amounts dictated by the employee. The actual SIT rates will differ for each state.
When a new employee is hired, they must complete a W-4 form for the state. This form will document the key data points for employers to begin withholding the appropriate State Income Tax from their paycheck.
Once a small business registers for State Income Tax and you have a completed W-4 form, you can being running payroll and withholding State Income Tax for an employee.
CorpNet can help your business register for your State Income Tax account, which will save you time in researching state requirements, filing paperwork, and dealing with your state’s administration office.