How do you work with SSI payroll reports if you are creating paychecks for your business? Find out more in this social security guide.
Are you one of the 40% of business owners who take their own salary? This is a bold move that can be time consuming and confusing.
You should find out the rules for reporting SSI wages and local and provincial taxes. You don’t want to have problems with the tax authorities because you made a mistake. It can be very costly for your business.
Learn more about SSI taxes and how to make sure your business reports SSI salaries.
What are SSI taxes?
SSI stands for Social Security Income. The Social Security program was adopted by the Roosevelt administration in 1935. It was supposed to provide economic security for retired Americans.
This program continues today, although it is often subject to political pressure. You may know this as OASDI, which stands for old age, survivors and invalidity insurance.
The way it works is that every American employee contributes to the program through income tax. When they reach retirement age, they can receive income from social security. They can also receive money if they are disabled and can no longer work.
The amount they can receive depends on when they retire and how much they have contributed to their career.
SSI Payroll Reports and Your Business
SSI payroll reports affect your business in different ways. First, you need to withhold a percentage of your employee’s income when you complete payroll. This percentage is 6.2% of their salary.
As an employer, you withhold 6.2% from employees and match that contribution with a total of 12.4%.
Employers must also withhold Medicare taxes, which is 1.45%. Again, you need to match the employee’s contribution. For employees who earn more than $ 200,000 per year, you must withhold an additional 0.9%.
For the self-employed, you are solely responsible for paying the full amount of OASDI and Medicare taxes. This is called the self-employment tax, which represents 15.3% of your income.
You may be familiar with the term FICA. It stands for the Federal Insurance Contributions Act. This is a law that requires you to withhold and contribute to Social Security and Medicare.
The FICA withholding that appears on paid bills is a combination of OASDI and Medicare taxes.
Maintenance of FICA tax records
If you want to stay on the right side of the law, you need to keep accurate records of what you paid employees and how much taxes withheld.
You have to keep the payroll. records for four years, according to the IRS. This can be tricky if you use spreadsheets to calculate payroll, it would be in your best interest to use a check auditor to keep accurate records in case your payroll taxes are in question.
Simple tax guide for small businesses
One of the most confusing areas of business ownership is accounting. This is because there are so many taxes to follow. Not only that, you also have reporting requirements.
SSI Payroll Reports are confusing because they are often confused with Medicare taxes, and there are a number of terms that mean the same thing. Remember that you are deducting a percentage from the salary and compare it.
The percentage can change, so you want to check with the IRS or your accountant for the latest information.
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