|
|
|
|
Usually firms believe that they are not required to file in taxes if they is comparatively smaller setup however, this assumption stands to be false as if a firm has income which falls in taxable income bracket. Small businesses have a responsibility of withholding amounts from their workers paychecks, which can be given to the federal or respective state government as income tax.
Income tax is administered by the state revenue agency or otherwise by tax assessors established locally. So before you start calculating your taxes, you must consider going through policies applicable and the type of tax deductable from your employee's income.
To help you through the phase, we have some easy to-do tips which will allow you to easily calculate income tax payables of your employee. To start off, you need to calculate the gross income of the employee, for the entire period, the amount would be used as taxable income. Once you have calculated this, you need to identify tax exempted items, like health insurance or any similar benefit enjoyed by your employee, to be sure if you are headed on right track, you must consult the tax agency to whom you would be paying the taxes so that they may tell you if the income is income tax deductable or not.
By now you would have a clear idea about what goes in as tax deductable or as tax exemption, reduce the amount from the gross salary calculated previously so that you withhold local income tax. This allows you to lower your employee taxable income, if there are no deductions then naturally all of their income would be subjected to income tax.
Once you have subtracted total allowances from total gross salary, now you have to determine how much income tax needs to be deducted or withhold. For that you must review the IRS table, pay period and employee filing status, this will allow you to know which tax bracket your employee falls in and exactly how much needs to be deducted.
You must remember that these policies are there to ensure that your employee contributes to the state or federal revenue as much he is required to and not more, therefore the government has provided clear guidelines on who is eligible to pay how much? It is your responsibility to ensure that your employees are not exploited by paying extra taxes because of negligence. Similarly you must also make sure that they do not pool in for your taxes, you must not transfer taxes applicable to businesses on pay slip of your employees.
|
|
