What payroll taxes do small businesses need to pay?

Payroll Taxes for Small Businesses in Missouri

Small businesses operating in Missouri must manage several payroll tax obligations to stay compliant and avoid penalties. Understanding these taxes helps streamline payroll operations and supports accurate bookkeeping and reporting.

Federal Payroll Taxes

• Social Security Tax: Employers must withhold 6.2% of each employee’s wages and match this amount.
• Medicare Tax: Employers withhold 1.45% of wages and match the same amount.
• Federal Income Tax Withholding: Employers withhold based on employee W-4 forms and IRS tax tables.
• Federal Unemployment Tax Act (FUTA): Employers pay FUTA tax, generally 6% on the first $7,000 of each employee’s wages, with possible credits reducing this rate.

Missouri State Payroll Taxes

• Missouri State Income Tax Withholding: Employers must withhold state income tax from employee wages according to Missouri Department of Revenue guidelines.
• Missouri Unemployment Insurance (UI): Employers pay state UI taxes based on taxable wage limits and their assigned rate, which varies by employer experience.

Operational Considerations

• Registration: Register with the Missouri Department of Revenue and the Division of Employment Security to set up withholding and unemployment accounts.
• Recordkeeping: Maintain detailed payroll records including wages, tax withholdings, and tax payments for compliance and reporting audits.
• Filing and Reporting: File federal and state payroll tax returns on time, typically quarterly, using electronic systems where available.
• Automation: Use payroll software or services to automate tax calculations, withholdings, and filings to reduce errors and save time.
• Employee Classification: Ensure proper classification of workers as employees or independent contractors to apply correct tax treatment.

As of 2026, staying current with Missouri’s payroll tax rates and reporting requirements is essential. Regularly consult official Missouri Department of Revenue and Division of Employment Security resources for updates.