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Make Money Online If you have employees, you are responsible for paying a variety of taxes at the federal, state, and local levels. You must also withhold certain taxes from the paychecks of your employees. So, what are employment taxes?

Most sole proprietors add a Schedule C "Profit or Loss from Business" form to their personal tax returns, EZ, "Net Profit from Business." In addition, a sole proprietor must pay both the employer and employee side of Social Security and Medicare taxes using Form SE, " Employment Tax." These taxes total 15.3 percent of net business income, or the business income after all business expenses have been subtracted.

Internet Business Opportunity Employment taxes include the following.

Free Money 1. Federal income tax withholding

Schedule SE (Form 1040), Employment Tax If your total business income, employment income, is $400 or more, you must file a Schedule SE and pay SECA tax on your entire net business income, including the first $400.

Work At Home Business 2. Social Security and Medicare taxes

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Free Online Affiliate Program 3. Federal unemployment tax (FUTA).

Indian Employment Credit This credit has been extended another year and will now expire at the end of 2004. This is good news if your business is located on an Indian reservation because it allows more opportunity to claim this special tax credit (up to $20, 000 per qualified employee). Electricity Produced by Renewable Sources Credit The placed in service date for qualifying property for the general business credit for electricity produced by renewable sources (Form 8835) is extended from 2001 to 2003.

Auction Coin Money Paper 4. Federal Income Taxes/Social Security and Medicare Taxes

Franchise Business Opportunity You generally must withhold federal income tax from wages paid to an employee. Form W-4 is used to determine the specific amount, although most payroll services or your accountant will do this for you.

Best Free Online Affiliate Social security and Medicare taxes pay for benefits that workers and families receive under the Federal Insurance Contributions Act (FICA). Social security tax pays for benefits for the retired, survivors, and disability insurance distribution provisions of FICA. Medicare tax pays for benefits under the medical care provisions of FICA. As an employer, you must withhold a percentage of these taxes from employee and match the withholding amount.

Blogging Money Thebillivard In general, you must deposit these taxes by check or cash to an authorized financial institution, typically your bank. Check with your tax professional to make sure you are not required to use the Electronic Federal Tax Deposit System (EFTPS). Regardless of the payment method, you will then report them on Form 941, the Employer’s Quarterly Federal Tax Return Federal Unemployment Tax (FUTA) FUTA is a combined federal and state program that provides unemployment compensation to the unemployed. As a business owner, you are solely responsible for paying this tax, to wit, nothing is withheld from the paychecks of your employees. FUTA is determined by using Form 940, but you are encouraged to use a tax professional to determine payment amounts.

Best Home Based Business Employment taxes can be frustrating for a small business owner. They are, unfortunately, a necessary evil as your business grows.

Catalogue: Finance | Taxes
Title: The Basics of Employment Taxes By: Richard A. Chapo

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