Payroll Taxes - Sales & Use Tax - Other

Payroll Taxes are the taxes withheld from employees plus the employer's share of employment taxes based on employee's earnings. I can assist you in establishing a system that will ensure that the payroll taxes are properly calculated and reported and the taxes paid. Payroll taxes include federal income tax withheld, FICA (social security) withheld, Medicare withheld, state income tax withheld, state disability insurance withheld, employer's share of FICA, employer's share of Medicare, state unemployment tax and federal unemployment tax. Payroll taxes are reported every quarter except federal unemployment taxes which are reported annually. W2s must be prepared annually for each employee. The taxes must be remitted on a timely basis, which may be as often as every payday.  Penalties for late payment accrue quickly. The business owner, even a corporation, can be held personally liable for payment of the taxes. Hiring someone as an independent contractor must meet specific guidelines to legally not involve payroll taxes. If you pay someone "under the table" expect problems. It is likely that a disgruntled or naive ex-independent contractor or ex-cash employee will apply for unemployment  benefits. The Employment Development Department will audit your business and bill you for both the taxes that should have been withheld and the employer's share of taxes plus penalties and interest. 

Sales and Use Tax is charged on retail purchases of tangible personal property. An adequate accounting system must be in place to correctly record taxable sales and the related sales tax liability to the state. Sales tax is the portion paid when the purchase is made. Use tax is the same rate as sales tax applied to taxable purchases on which no sales tax was charged by the seller, as in an out of state purchase. Sales and use tax is administered by the California Board of Equalization. Retailers, any one that is selling a product to the ultimate consumer, must have a seller's permit which will allow them to purchase materials or finished items that they will ultimately sell without paying sales tax. There are many exceptions and rules in applying sales tax. If sales tax should have been charged on a sale but was not, the seller is still responsible for paying the tax. Sales volume determines the frequency of filing and making payments. Do not be overly optimistic in projecting your sales on the seller's permit application since this will effect the deposit that may be required.

Personal Property Tax is administered by each county assessor. An annual affidavit must be filed if your business owns $100,000 of personal property or if the assessor mails you an affidavit. Personal property is machinery and equipment, furniture and fixtures and inventory. To correctly complete the affidavit, detailed records of taxable assets must be maintained. Based on the affidavit, the assessor will issue a tax bill.

   updated 05/26/07.