J.K. Lasser's Small Business Taxes 2013: Your Complete Guide to a Better Bottom Line

Employment Taxes

You may be liable for the payment of certain taxes with respect to the compensation you paid to your employees. If you own a corporation, these obligations apply even if you are its only employee. If you are a single member limited liability company, you are treated as a separate entity for employment taxes, even though you are a “disregarded entity” for reporting and paying your own income taxes; you must report employment taxes on wages paid to employees, under your entity name and using an employer identification number (not your Social Security number). As a small business owner, you need to know what taxes you are responsible for, where and when to deposit the taxes, and what returns you must file for employment taxes. The returns you must file are discussed later in this chapter. In this section you will learn about employment taxes and where to deposit them. The deductibility of these taxes is discussed in Chapter 13.

Employment taxes (also called payroll taxes) is a term that collectively refers to an employer’s tax obligations with respect to employee compensation. Employment taxes includes income tax withholding (both federal and, where applicable, state), FICA (the employer and employee share, as explained later), FUTA (federal unemployment tax, as explained later), and state unemployment tax. There may also be state disability taxes.

NOTE

In February 2010, the IRS began a 3-year audit program of employment tax returns with 2,000 returns selected ...