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If you’ll have employees, learn employer tax obligations

As an employer you’re required to withhold chunks from employee paychecks, plus you must pay other employer taxes -- and provide timely and proper reports to the IRS and various other federal and state agencies. It is imperative that you understand exactly what all is required.

Employer tax responsibilities are so complex and handling them right is so critical that you want your accountant’s blessing on how you go about this. And, preferably, you want their office to help you set up your employer tax system, whether it will be handled in-house at your company or coordinated with an outside payroll service provider.

Tip: Use an outside service to handle your company's payroll. Outside payroll services are available from your bank, your accounting software company or other providers for a modest fee. They handle the ongoing detailed paperwork for you 100% correctly -- cheaper and quicker than you could do it inhouse.

And there are added benefits you don't think about. Like whenever the government makes a change in something, your payroll service provider just takes care of it -- even if the change is retroactive! You won't have to pour over the government gobbledygook trying to understand what must change. Your payroll service has attorneys and CPAs who enjoy doing that much more than you ever will.

Where to get info about employer taxes

Since our focus here in on income tax issues, we won’t detail your employer tax responsibilities, but use these resources to familiarize yourself with what’s expected.

IRS Publication 15 (Circular E) Employer’s Tax Guide
When you glance at this 68-page manual, you will see why you asked your accountant about help.

Search for 15 via the drop-down for “Forms & Publications” on the IRS site.

You may like the more casual approach to this topic in IRS FAQs. This makes no claim to being totally comprehensive but does have answers to employer questions about reporting tips, mailing W-2s, providing benefits, day care, tuition reimbursement and much more.


State Employer Info
For corresponding state employer info, check with your state’s Department of Revenue (which may be called something else, like Board of Equalization). Use the handy links at:

State and Local Government on the Net

Your friendly local SBDC
Also check with your local Small Business Development Center (SBDC). One of their main goals of this Small Business Administration (SBA) program is to help small companies create more jobs in their region. So your SBDC may offer classes and other help for employers. You can find your closest SBDC by looking in the front of your phone book in the “government” pages, most likely listed within community colleges under public schools. Or you can click to SBDCs in your state or territory from this map:

Small Business Development Centers

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