What are 941 payroll taxes and what purpose do they serve?
If you are a business that decides to have employees, you will be obligated to pay their 941 payroll taxes. This means...
- You withhold their federal taxes from their paychecks and send them to the U.S. Treasury on their behalf. You are essentially the "conduit" of this money to the IRS. (You don't have to pay anything, just send the employee's money to IRS on their behalf).
- As the employer, you will pay 7.65% of their salary toward their Social Security and Medicare Taxes. This amount is really the "payroll taxes." (The employee pays the other 7.65%).
- The totals of the #1 and #2 are sent together as payroll taxes to the U.S. Treasury.
When you become a business and plan to have employees, you'll apply for an Employee Identification Number (EIN). This EIN will also help you get a bank account and legitimize yourself.
Going forward, the easiest way to pay your 941 payroll taxes is by signing up to make the payments via the Electronic Federal Tax Payment System.
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