If you have employees who work at least eight hours per week, you’re required to register your business with the state and pay taxes and payroll fees on behalf of your employees. The process of paying these fees and taxes can seem complicated at first, but following the right steps will help ensure that your business complies with all federal, state, and local laws related to payroll taxes. Following this guide on how to do payroll in Washington State will help you manage your workforce successfully from start to finish so that you can focus on what’s most important to your business: doing great work!
Why do you need to do payroll
If you’re an employer in Washington, you know that a lot of regulations are involved in doing payroll. The good news is that following these regulations can make your life easier. Here’s a quick rundown of what you need to do for payroll in Washington state.
#1: You must withhold taxes from your employees’ wages. This may include federal income tax, social security tax, and Medicare tax.
What is payroll
Payroll is the process of paying employees and collecting taxes. There are a number of different ways that payroll can be managed, but the most common method is by using a timekeeping system such as Square. Employers have to withhold some money from their employees’ paycheck for federal and state taxes. The withholding amounts are determined by either federal or state regulations, depending on the location of the employer and employee. The amount withheld may change over time, due to changes in tax law.
State taxes every employer must pay
All employers are responsible for paying Washington State taxes, including the following:
- Employer contributions to OASI and DI (Social Security).
- Employer contributions to the Unemployment Compensation Insurance Fund.
- Unemployment compensation tax on wages paid by an employer.
- Reemployment services fee on wages paid by an employer.
Federal taxes every employer must pay
Every employer must withhold federal taxes from their employees, which include social security and Medicare taxes. In addition, employers must pay the Federal Unemployment Tax Act (FUTA) tax if they have at least one employee who earns more than $1,500 in wages during a calendar year. The FUTA tax rate is 6% of the first $7000 of employee wages.
Steps for handling payroll
In Washington state, there are two options for handling payroll. The first is a Full Service Payroll Company, which will handle all the paperwork and calculate your taxes for you. The other option is an Independent Paycut System (ICS), which is designed for small businesses who only need a basic payroll system.
Applying for an EIN
The first thing you need to do when starting a new business is getting an Employer Identification Number (EIN). This can be done online at the IRS website. Your EIN is a unique identifier for your company. You will use it every time you are filling out payroll forms or reporting taxes, so make sure to keep it safe. In order to apply for an EIN, fill out Form SS-4 and send in with payment of $1. You may also fax or email the form if necessary, but only after receiving written confirmation from the IRS that they received your application before proceeding with filing anything else electronically or in person.
Third-party apps are available online at no cost
If you are looking for a comprehensive and affordable payroll software, there is an app for that. The apps are free, but they do have a monthly fee. If your company is up-and-coming or just starting out and does not generate enough revenue yet, this might be the best option for you.