Tag Archives: How to calculate payroll taxes

What Insufficient Sleep Can Do To You

Most business owners and entrepreneurs are sleep deprived. It is not that they have anything against sleep; it’s just that they can think of at least ten other more productive things (like how to calculate payroll taxes) to do in the same time. While you may be able to get things done by staying up for 2-3 hours after bed time, here is what those few hours can do to your health.


  • Increase Blood Pressure– Less than 6 hours of sleep per night has been linked to increased blood pressure and other heart conditions.
  • Increase Inflammation– Insufficient sleep has been shown to increase inflammation in the body, thereby leading to conditions like heart problems, hypertension, diabetes, asthma, depression etc.
  • Impair Cognitive Abilities– Regular sleep deprivation can adversely affect your attention span, decision making skills, memory etc.
  • Increase Stress Hormones– Sleep regulates stress hormones thereby keeping your nervous system healthy. Understandably, inadequate sleep leads to increased irritability, stress, anger, depression and mental fatigue.
  • Increases Mortality Risk– Recent studies indicate that mortality risk increases if you sleep less than 5 hours a night.
  • Weight Gain– During sleep, the body produces hormones that regulate appetite, metabolism and energy. Reduced sleep upsets the balance and often leads to weight gain.

How to Calculate Payroll Taxes

If you feel you are not getting adequate sleep, it may be time to make some lifestyle changes. Here are some things you can do.

  • Try to get 7-8 hours of good sleep every night.
  • Go to bed at the same time.
  • Avoid caffeine and alcohol before going to bed.
  • Make sure your bedroom is a quiet, dark and cool space.
  • Avoid TV and electronic gadgets at least an hour before bed.
  • Do something relaxing like reading a book or listening to music before sleeping.

Sleep is important for the well being of your body. Without sleep, you will soon find that you are not able to focus on work. Are the few hours of extra work to figure out how to calculate payroll taxes worth the long term effects?

Do You Need Payroll Services?

If you run a business and have employees or contractors of any type, you need a reliable payroll service. Why? Simply because it will ensure that those who work for you get paid regularly without you having to get involved. So if you are ready to invest in a good payroll system, the first thing you  need to do is thoroughly research the different payroll software available and find out which one provides good support and handles the features you need.

Payroll Service

Aside from just sending out pay checks, a good payroll management system is capable of setting up guidelines for employees and handling deductions. If you are still trying to figure out how to calculate payroll taxes, a payroll software is a good option as most services are capable of determining payroll taxes. Some bookkeepers also provide payroll processing services, so if you use bookkeeping services, you could also consider asking them if they handle payroll.

How to Calculate Payroll Taxes

What Factors Should You Consider When Deciding on A Payroll Software?

  • Price– This one is quite obvious. Prices vary depending on the service provider and the features you opt for. Consider what features you need carefully, you need a service that will provide you value for your money.
  • Accuracy– You cannot afford to use a program that is not accurate and is riddled with errors. Check user reviews and choose wisely.
  • Customer Support– You are bound to run into one or the other issue when using a new software. When that happens, who will you turn to but the customer support team? So you need a program with good customer support service.
  • Ease of Use– Business owners rarely have the time or luxury to figure out how a program works or how to calculate payroll taxes on the software, so you need a software that is easy to use and flexible with proper instructions.

This decision is not one to be taken lightly, so take your time and discuss it with your bookkeeper or accountant.

How to Keep Your Payroll Data Safe

All employers have access to confidential employee data- social security numbers, bank account details, addresses, details of wages etc; all of which comprise payroll data. Payroll data is sensitive and it is the responsibility of the employers to keep it safe and confidential. Unfortunately, data security is a major problem in today’s world and data breaches are a common affair. No company is safe from data breaches; all you can do is ensure you take steps to keep your business records and data safe from attacks. So what can you do to ensure the safety of your data?

  • Divide Payroll Responsibilities– The best measure against employee fraud is to involve more than one individual for sensitive responsibilities, in this case payroll. If you can afford to, you can assign tasks like reviewing time sheets, preparing payroll data, how to calculate payroll taxes and generating payments to different individuals. This can greatly reduce the incidence of pay check theft and fraud.


  • Spread Awareness of Phishing among Employees– There has been an increase in the number of companies falling victim to phishing schemes. These emails generally claim to be from company executives and request for personal information. Educate employees of the dangers of such schemes and also how they can identify phishing emails, such as checking the email address it is sent from (whether it is a company email address or not). When in doubt, it is always better to contact the concerned executive before sending out the details.
  • Invest in Reliable Computer Security Systems– Secure your payroll system. Studies show that over half a billion personal records were stolen via data breaches in 2015 alone. So make sure you have a strong firewall and spam filters set up, keep your systems neat and up-to-date, while figuring out how to calculate payroll taxes. Back up your data regularly and change passwords frequently. Get professional help to ensure your security systems are in place.

Data breach

  • Keep Physical Data Safe– Ensure you have everything covered; make sure your paper files, CDs and USBs are also secured. Keep all such materials in secure locations with limited staff access.

Data breaches can happen at any time in any place. Be on your guard at all times and take all necessary steps to keep your data safe in the event of an attack.

When Should You Outsource Payroll Processing?

Payroll processing is a bit complicated; calculating hours and wages for individual employees, then add to this mix, tax laws, labour laws, local, state and federal laws and you have a lot on your plate. When you start your own business, your first priority is to keep your costs low. So you take care of everything- from recruitment and training to how to calculate payroll taxes and bookkeeping.

Then your business begins to grow- the number of employees increase, you open new branches, you have more orders than you can keep up with; now you don’t have time to handle all the tasks you had taken upon yourself. So what now? That’s when you know you should consider outsourcing payroll processing. Here are some more instances of when you might want to consider outsourcing payroll processing.

How to Calculate Payroll Taxes

  • If You Have Out Of State Employees– Tax laws vary depending on the county and state. As your business grows, it will be difficult for you to keep track of the tax and labour laws of different states. In such cases, it is best to leave the processing to professionals and allow them to worry about how to calculate payroll taxes.
  • If You Have More Than 50 Employees– Once you have more than 50 employees, you are required by law to show that your employees have affordable health coverage; another task to add to your ever increasing pile of work. Payroll processing companies can handle this ease and you can focus on your growing business.

Outsourcing Payroll Processing

  • If There Are Payroll Changes Every Cycle– Variable hours, part time employees, new employees; if you see a lot of that every cycle and have a tough time keeping up with things, you just might want to consider outsourcing.

Whether you are just trying to figure out how to calculate payroll taxes or know your way around well, you have to be very careful how you handle your company’s payroll. If you don’t, the next thing you know the IRS will come calling, simply because you didn’t pay your payroll taxes. So if you feel you can’t handle it, do not hesitate; contact a good payroll processing company.

Better Employee Management and Payroll Processing

The business sector is fast paced, yet ever changing and challenging, which is why business people are always looking for ways to make managing their business easier, more efficient and quick. In case you haven’t been able to keep yourself apprised of the latest changes and trends, well, this one is for you.

  1. Types of Employees– The hiring sector is undergoing a change- employers seem to favour part time and 1099 contractors to full time employees. There are numerous differences between the various types of employees. Understand each type and their differences, decide which one would best suit your needs and hire accordingly.

How to Calculate Payroll Taxes

  1. Invest in Cloud based Payroll and Accounting Software– The advantages of using a cloud based payroll and accounting software are many. From how to calculate payroll taxes to where your business stands financially, there is a lot that these systems can do for you. It also allows you to link your different systems and build a coherent work and employee management system.
  1. Open System with Access for Employees– One of the benefits of using a cloud based payroll and accounting software is that it allows you to provide employees with access to view their payroll details. So now your employees will be able to keep track of the hours worked and other details, thereby facilitating transparency and reducing the number of payroll queries.

Employee Management and Payroll

  1. Automatic Payroll Calculation– You can also allow your employees to enter their hours themselves and the software can calculate the pay for you. All you have to do is review the data and approve it. That really could save you a lot of time; no more “how to calculate payroll taxes”, “how to calculate pay”. Things are a lot easier.

Running your own business, while being a rewarding experience, can also be a strenuous and tiring one. As a business owner, small, mid- size or large, it is always in your best interests to find out how you can make managing your business easier.

How to Calculate Payroll Taxes

First off, what are payroll taxes? These are simply federal, state and local taxes that employers hold back from their employees. The taxes include income tax, social security and Medicare taxes. To know how to calculate payroll taxes, you will need to know that Social security and Medicare taxes are referred to as payroll taxes. Unemployment taxes are paid by the employer and depend on the employee’s wages and other factors.

How to Calculate Payroll Taxes

Income taxes are calculated by the IRS based on the details provided by the employee in the W-4 form, where the individual is required to declare the amount of withholding. An employee can declare more in withholdings than required by the IRS.

Now we come to the next question- how to calculate payroll taxes? For calculating payroll taxes, the employer must know the current tax rates. For the current year 2016, the Social security tax rate for employees and employers is 6.2% (unchanged from 2015), while the Medicare tax rate is 1.45% (also unchanged from 2015). The social security wage case limit is $118,500. Upon reaching these wages, the social security taxes will not be deducted anymore. Medicare taxes will continue despite the wages.

Calculating payroll taxes

As mentioned earlier, unemployment taxes, namely FUTA (Federal Unemployment Tax Act) and SUI (State Unemployment Insurance) have to be paid by the employer. FUTA tax rate is 6% and for SUI taxes, a credit of up to 5.4% can be considered. FUTA base wage is $7000; once employee wages cross $7000 for the year, the deductions will stop.

While this may basically be what you need to know about how to calculate payroll taxes, it would be wise to seek professional help if you are doing it for the first time. You can also use business calculators which can help you make informed decisions. Calculating payroll taxes is not a task to be taken lightly if you are not sure what you need to do.