Employer Payroll Taxes

Employers should remit payroll taxes as per the law. These taxes are utilised for various programs, most of which are for the benefit of the employees. Learn more about these taxes here. 

What Are Employer Payroll Taxes?

Employer payroll taxes are taxes imposed on employers as a result of paying their employees. Depending on the taxation laws, some of these taxes are fully shouldered by the employer while some are split with the employee. If it’s split between the employer and employee, it’s usually the employer’s responsibility to withhold the tax from the employee’s paycheck and remit it to the government. 

Types Of Employer Payroll Taxes

Which payroll taxes are paid by employers depends on the taxation laws of the country where you operate your business. Here are some examples of employer taxes on payroll:

New Zealand

In New Zealand, employers have to pay for the Employer Superannuation Contribution Tax (ESCT) and Fringe Benefit Tax. Furthermore, it’s the employer’s responsibility to withhold income tax and remit it to the government. 

Philippines

In the Philippines, employers pay for half of social taxes, which are composed of contributions to the Social Security System and Philippine Health Insurance Corporation (Philhealth). Employees shoulder the other half of the social taxes, but it’s the employer’s responsibility to withhold and remit them along with the income tax. 

United Kingdom

The UK has two primary payroll taxes: income tax and the National Insurance Contributions. Employers must also take care of pension contributions and student loan payments if applicable. 

Singapore

Singapore doesn’t require their employers to withhold income tax; it’s the employee’s responsibility to file their annual tax declaration and pay the government. However, employers have to make contributions to the Central Provident Fund and Skills Development Fund. 

United States

The US has four types of payroll taxes: Social Security Tax, Medicare Tax, Federal Unemployment Tax, and State Unemployment Tax. 

Best Practices On Employer Payroll Taxes

When and how employers pay the different payroll taxes are usually stipulated in the national/federal law as well as the regulations set by the concerned government body. Here are some of the best practices on employer payroll taxes:

Understand the laws

In many cases, employers should not only look into laws on taxes, but they must also check labour laws as well as the specific acts on the required contributions. If you have a legal team, it’s best to discuss payroll with them to ensure compliance. 

Keep track of the deadlines 

Some contributions may not have a strict deadline as long as you remit regularly (usually monthly), but income taxes are often a different story, particularly when it comes to filing the forms. 

Note that failing to remit required contributions is illegal. For example, in the Philippines, employers who fail to deduct and remit contributions to the Social Security System can be penalised with a fee and imprisonment. 

Review contracts and classify employees correctly

Verify the type of employees you have as their classification affects employer payroll taxes. If you mistakenly classify an employee as an independent contractor, you may fail to withhold and remit taxes and contributions. This can pose problems once the employee sees there are no remittances under their name. 

Consider using a payroll software program

If you want to streamline your employer payroll tax payment, you might want to consider using payroll software. The software can calculate payroll and taxes automatically, reducing the risk of errors. Most third-party software is also up to date with the laws and regulations, helping you with compliance. 

Make sure everything is documented

Keeping the records that you have deducted and remitted employer payroll taxes can help protect your business should concerns arise in the future. 

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