Payroll and Payroll Taxes

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A bookkeeper’s payroll role is all about accuracy, compliance, and keeping employees paid correctly and on time. 

1. Payroll Setup & System Configuration

Bookkeepers often help businesses get payroll started by:

• Setting up payroll accounts

• Ensuring proper state and federal registrations

• Connecting payroll to bookkeeping software for s

A bookkeeper’s payroll role is all about accuracy, compliance, and keeping employees paid correctly and on time. 

1. Payroll Setup & System Configuration

Bookkeepers often help businesses get payroll started by:

• Setting up payroll accounts

• Ensuring proper state and federal registrations

• Connecting payroll to bookkeeping software for seamless reporting

2. Process Payroll Each Pay Period

This includes:

• Entering employee hours or salaries

• Calculating gross pay, deductions, and net pay

• Running payroll on schedule

• Issuing direct deposits or checks

3. Manage Payroll Tax Withholding & Filings

Bookkeepers help ensure compliance by:

• Calculating federal, state, and local payroll taxes

• Withholding the correct amounts

• Filing payroll tax forms (W‑2, 1099, 941, 940, etc.)

• Remitting taxes on time to avoid penalties

4. Maintain Payroll Records

They keep organized records of:

• Pay stubs

• Tax filings

• Employee deductions

• PTO and time‑tracking data

This supports compliance and audit readiness.

5. Integrate Payroll With the Books

A key bookkeeping task is ensuring payroll ties back to financial statements:

• Posting payroll expenses

• Reconciling payroll liabilities

• Matching payroll reports to bank activity

6. Employee & Contractor Management

Bookkeepers may also assist with:

• Onboarding employees into payroll systems

• Managing contractor payments

• Preparing year‑end W‑2s and 1099s

7. Compliance Support

They help businesses stay compliant with:

• Wage and hour laws

• PTO tracking

• Workers’ compensation reporting

• Benefits integration 

Taxes (with emphasis on payroll‑related taxes)

Payroll taxes are a major part of business tax compliance. They include both employee‑withheld taxes and employer‑paid taxes.

Types of payroll taxes

According to QuickBooks and AccountingCoach:

• FICA taxes (Social Security + Medicare) — shared by employer and employee

• Federal Income Tax (FIT)

Taxes (with emphasis on payroll‑related taxes)

Payroll taxes are a major part of business tax compliance. They include both employee‑withheld taxes and employer‑paid taxes.

Types of payroll taxes

According to QuickBooks and AccountingCoach:

• FICA taxes (Social Security + Medicare) — shared by employer and employee

• Federal Income Tax (FIT) — withheld based on the employee’s W‑4

• State Income Tax (SIT) — varies by state

• FUTA (Federal Unemployment Tax) — employer‑paid

• SUTA (State Unemployment Tax) — employer‑paid

How payroll taxes work

1. Calculate gross wages

2. Withhold employee taxes (FIT, SIT, FICA)

3. Add employer taxes (FICA match, FUTA, SUTA)

4. Deposit taxes to IRS/state via EFTPS or state portals

5. File payroll tax forms (941, 940, W‑2, etc.)

6. Correct errors using 94X‑X forms if needed

7. Maintain accurate records for compliance

Employer responsibilities

LegalClarity emphasizes that employers must:

• Track withheld taxes as trust fund liabilities

• Separate employee‑withheld taxes from employer expenses

• Avoid misclassification to prevent IRS penalties