Payroll taxes: 4 basic things you need to understand

In simple and brief words payroll taxes are those that employees and employers must pay based on wages and salaries paid to employees. The employee pays part of these taxes through a payroll deduction, and the employer pays the rest. 

Basically these taxes are used to finance social insurance programs like medicare and social security. Payroll mistakes are common, at the same time it’s an area where companies don’t want to make them. Let’s check out why MidtownHR assigns every client a dedicated payroll specialist, as the single point person for different important activities related to payroll. 

4 basic things you need to understand about payroll activities

Taxes and risk mitigation

Risk management is an important component of running a business. Partnering with a PEO can help ensure you have all potential risks covered. 

For instance, if you work with Midtown HR as your co-employer, we submit all taxes on your behalf under our federal ID. This relieves you of both the risks and responsibilities of properly tracking and meeting your quarterly tax obligations.

Time and attendance

With this option it’s possible to manage alerts and reporting that can help improve absenteeism and help safeguard against wage and hourly lawsuits that implement timekeeping rules which are compliant with wage and hours laws.

So one online time-tracking portal for hourly workers that gives both employees and management instant clarity about time worked and money earned would be an advantage for the whole organization.

You can also read: What is a professional employer organization (PEO) and how does it help my company?

Employee payroll platform

A system that handles payroll services including payroll taxes, compensation, benefits management and also organizes employee records it is a tool or a resource you would like to leverage.

Streamline payroll and go paperless with PEOs online platform. It lets workers self-manage their tax elections, download pay stubs, track PTO, set up direct deposit rules, submit digital tax documents and more.

Reporting

Create a range of useful reports on salaries, taxes, paid time off, employee hours and more. Accurate reports are essential for compliance, budget planning and accountability across your organization.

What’s the difference between employee and employer payroll taxes?

As said before, payroll taxes are paid by both employees and employers, but there’s one big difference, which is that payroll taxes paid by employees affect employees’ net pay, but payroll taxes paid by employers don’t.

Taxes that employees pay are subtracted out of an employee’s gross pay, which lowers the net pay for that paycheck, on the other hand payroll taxes paid by the employer do not affect an employee’s paycheck. 

MidtownHR can help your company with simple solutions for payroll and taxes, propose benefits that really feel like benefits, keep up with employment law and also help protect your team. MidtownHR is on a mission to create a world of optimistic entrepreneurs.