Rivermate | Product owner - Andrew Simon

Global Work Glossary

What are employer payroll taxes and how are they managed?

Employer payroll taxes encompass the taxes a company must pay on behalf of its employees, including Social Security tax, Medicare tax, federal and state unemployment taxes. Managing these taxes is crucial for compliance and financial stability.

Necessary Tax Forms for Employers

Key tax forms for employers in the U.S. include: Form W-2: Reports taxes withheld from employee wages. Form W-3: Provides a summary of Forms W-2. Form W-4: Completed by employees to determine federal income tax withholding. Form 940: Reports annual FUTA liability. Form 941: Reports payroll taxes and wages quarterly.

Variations in Employer Taxes by Country

While the above details apply to U.S. businesses hiring domestic employees, international expansion and remote work introduce additional complexities. Each country has its tax requirements, including healthcare, social welfare, and pension contributions.

Calculating Employer Payroll Taxes

Employer payroll taxes are typically a percentage of an employee's gross taxable wages. The FICA tax rate is 15.3%, split equally between employer and employee. Additionally: Social Security Tax: 6.2% paid by both employer and employee. Medicare Tax: 1.45% paid by both employer and employee. Employer-only payroll tax rates include FUTA and SUTA, with rates varying by state and business circumstances. Utilizing payroll software with an employee cost calculator streamlines this process for business owners.

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