There are many people who think that they are doing business by the book only to notified that they have not paid taxes are required by the Federal Unemployment Tax Act (FUTA) It is important to know that many people are not compliant of these taxes because they even don’t know they exist. There is the need to know that with this type of a business, the federal government is authorized to collect taxes from a business that have employees. It is from there that the federal unemployment trust fund uses the money to fund the state unemployment agencies. It is from there that the state agencies pay those workers who are out of work and have qualified for unemployment insurance.
You need to understand that as an employer, you can pay this tax either annually or quarterly. Another thing you need to know that FUTA revenue is payroll. There is the need to know that unlike the case of social security tax which is paid by workers, the FUTA tax is an obligation of the employer. The reason why FUTA is referred to as a payroll tax is that it depends on the due income of workers.
Employers do not pay taxes on the salary of all their workers. If your venture is a family-owned business; there is the need to know that you can receive special consideration. If you are the employer, you do not have to pay these taxes on the income of your spouse or children who are below the age of twenty-one. If your business use independent contractor; you need to know that you are also exempted from paying these taxes. The other types of people that are exempted these types of taxes include religious organizations and the nonprofit groups. It is vital to ensure that you make a step of ascertaining with your state tax agency.
Typically, the employer pays 6% of the first $7,000 the employee receives. In that case, if the worker made $7,000, the employer will pay 6% of that which is $420. The one thing that you need to know is that the amount of tax will be $420 for those who earn more than this since it is still 6% of the first $7,000. If the earnings, however, are less than seven thousand dollars, there is the need to know that the employer still pay 6% but of the earnings.
There are various aspect of FUTA tax as a business person that you need to understand. In that case, the best thing to do is to ensure that you hire a professional to deal with that.