What payroll taxes do small businesses need to pay?

Payroll Taxes for Small Businesses in Utah

Small businesses operating in Utah must manage several key payroll taxes to ensure compliance and smooth operations. Understanding these taxes helps maintain accurate bookkeeping and timely reporting.

Federal Payroll Taxes

• Social Security Tax: Employers and employees each pay 6.2% on wages up to the annual limit set by the IRS.
• Medicare Tax: Both employer and employee contribute 1.45% on all wages with no wage limit.
• Federal Unemployment Tax Act (FUTA): Employers pay FUTA tax, typically 6.0% on the first $7,000 of each employee’s wages, with potential credits reducing the effective rate.
• Federal Income Tax Withholding: Employers must withhold federal income tax from employee wages based on IRS withholding tables and employee W-4 forms.

Utah State Payroll Taxes

• Utah State Income Tax Withholding: Employers are required to withhold state income tax from employee wages. Rates vary based on employee exemptions and filing status.
• Utah Unemployment Insurance (UI): Employers pay UI taxes on employee wages. Rates depend on the employer’s experience rating and the taxable wage base, which is updated annually.

Operational Considerations

• Registration: Register with the Utah State Tax Commission and the Utah Department of Workforce Services to handle withholding and unemployment taxes.
• Reporting: Submit quarterly payroll tax returns to both federal and state agencies, including IRS Form 941 and Utah’s state withholding and unemployment reports.
• Recordkeeping: Maintain accurate payroll records, including wage details, tax withholdings, and tax payments for at least four years.
• Automation: Use payroll software or services that integrate federal and Utah state tax calculations to reduce errors and ensure timely payments.
• Compliance: Stay updated on changes to tax rates, wage bases, and reporting requirements. As of 2026, monitor state announcements for any updates.