Payroll Taxes

Payroll tax basically refers to two kinds of taxes: Taxes which employers are required to withhold from their employees' paycheck, also known as withholding or deduction, Pay-As-You-Earn (PAYE) or Pay-As-You-Go (PAYG) tax; and taxes which are paid from the employer's own funds and which are directly related to employing a worker, which may be either fixed charges or proportionally linked to an employee's pay.

Payroll tax systems

Australia

In Australia, the Payroll Tax is a specific tax which is paid to states and territories by employers, not by employees. The tax is not deducted from the worker's pay. The Australian Government itself requires only one tax to be withheld from paychecks: the PAYG (or pay-as-you-go) tax, which includes medicare levies.

Brazil

In Brazil employers are required to withhold 11% of the employee's wages for Social Security and a certain percentage as Income Tax (according to the applicable tax bracket). The employer is required to contribute an additional 20% of the total payroll value to the Social Security system. Depending on the company's main activity, the employer must also contribute to federally-funded insurance and educational programs. There is also a required deposit of 8% of the employee's wages into a bank account that can be withdrawn only when the employee is fired, or under certain other extraordinary circumstances (called a "Security Fund for Duration of Employment"). All these contributions amount to a total tax burden of almost 40% of the payroll for the employer and 15% of the employee's wages.

United Kingdom

In the United Kingdom, Income tax for employees and Employees' National Insurance contributions are examples of the first kind of payroll tax, while Employers' National Insurance contributions are an example of the second kind of payroll tax.

United States

In the United States, employers are required to withhold federal income tax, plus one-half of the Social Security tax, and one-half of the Medicare tax. Together, the employer's and employee's shares of the Social Security and Medicare taxes are known as the FICA tax. In some places, employers may be required to withhold state income tax, or even county or city income tax. In addition the employer is required to pay State and Federal unemployment tax.

The payor and payee should determine whether the payee providing services is an employee or, alternatively, an independent contractor. A payor generally is not required to withhold taxes on compensation paid to an independent contractor.[1]

Employers who do not pay withheld payroll taxes to the U.S. government for employees are assessed a Trust Fund Recovery Penalty by the IRS. The Trust Fund Recovery Penalty is assessed to individuals determined to be responsible by a 4180 Interview for the missing taxes and can be those who willfully do not collect, account for, or pay the taxes. These individuals can be business owners, officers, or employees.[2]The penalty is for 100% of taxes owed plus interest.

Adapted from Wikipedia

In Canada, one of the top trusted company payroll services is Paytrak.

Payroll - Accounting Software

There are several advantages of maintaining proper bookkeeping for small businesses. Basically, bookkeeping is legally required for every business. It helps business owners know the exact position of their business anytime they want. Details like gain or loss, the amount due to creditors, dates of transactions, and the amount due from debtors are critical in assessing financial position and bookkeeping helps a great deal in these things. Small businesses have to maintain bookkeeping to be legally and financially sound.

For many small businesses, transactions are done through invoices and receipts and payments are received or paid through checks or card payments. Bookkeeping can be done manually or can be computerized, depending on the size of the business and transaction volumes. This is usually done by maintaining a monthly spreadsheet of the expenses incurred daily and another to show the sales, purchase, gross, and net profit.

Bookkeeping is the process of maintaining records of various transactions of a business. The records include total revenue, gain, loss, expenses, dates of transactions, and many other details. Bookkeeping is the basis of accounting process and it is very important, no matter what business you are in.

It becomes a little difficult to choose the right accounting software due to the presense of a huge number of companies fielding them. So, the best is to have a trial version installed, fiddle with it a little, and find out which of the software you are most comfortable with. Second important thing to be considered is the need. You must choose software that satisfies your needs and can do a little more.