Payroll taxes are a section of money that businesses how, big or small, need to comply with when they hire an employee in the state of California. It’s the tax that needs to be paid by the employer where they hold a certain amount from the paychecks of the employees and match that amount to pay later the shares of the employee’s social security and their medicare expenses.
It’s part of the payment that the employer makes to ensure that the companies that are hiring the personnel will have a better life after retirement from that organization. In California, the companies are responsible for the FICA taxes, which is one of the popular federal taxes, the companies are also liable to provide the state-level payroll taxes.
In this blog, we will know in detail about the state-level payroll taxes in the state of California and the compliance standards they need to match that.
Understanding the Four Major Differences in California Payroll Taxes
As a progressive tax state, the state of California needs to look after the employees of the organization. To help businesses look after these matters, they need the best tax lawyers who can help the businesses navigate these complex tax issues and allow the venture to simplify the process by streamlining the tax protocols.
1. Unemployment Insurance Tax
The first is the unemployment insurance tax, which falls under the Labor program of the Social Security Act, and it provides temporary payments to people who have lost their jobs due to some economic shockwaves. A company that goes with layoffs or restructures the business then the business must notify EDD, and they decide the taxable percentage of the wages that they need to pay to that department.
This new tax has been formed under the Federal Unemployment Tax Act (FUTA), which obliges the companies to keep certain tax rates in the system, and the businesses also started to keep healthy severance packages which give a cushion to the employees when they are being fired from the organization.
2. Employment Training Tax
The state uses the employee training tax to upskill the workforce within the state, which in return benefits the company as the workforce is prepared to capture the new trend in the industry, and the businesses can get a productive workforce, which will help the business to stay competitive in the wider market area.
3. State Disability Insurance Tax
The SDI taxes are paid by the employers withheld from their annual wages. They are provided to the employees when they are facing non-work related injuries or paid family leaves to the employees who can’t attend work for several weeks and months. The holding rate of wages from the employees is 1.1% of their salaries and works as a benefit for those who face such grave situations in their working days.
A company can take the help of the San Francisco tax attorney to deal with all these compliances and can allow the business to navigate all the payroll taxes that are there in the state of California.
