Employer-Paid Taxes

Everyone looks for ways to save on their taxes — especially employers. Corporations as well as citizens have a baseline of tax obligations to meet, and it's essential that you get a primer on small business tax basics. Knowledge of these obligations may help you reduce the burden by planning your payments and using certain deductions.

But no matter how much time and effort you put into reducing your taxable obligations, all businesses must still pay the following taxes:

• Medicare and Social Security tax (FICA). This tax funds what are essentially insurance benefits for senior citizens. An employer pays half the FICA taxes, and withholds the other half from their employees' paychecks.

• Federal unemployment tax. Federal unemployment taxes fund state unemployment benefits and administrative costs. An employer must pay federal unemployment tax on the first $7,000 earned by each employee during a calendar year.

• State unemployment tax. Like federal unemployment taxes, employers, not employees, pay state unemployment taxes. Rates are based on a business's location, size, and number of employees, but since each state runs its own unemployment program, these rates can vary.

Some states also require employers to pay a disability tax every quarter to cover the costs of the state's disability program. Check with your state's guidelines to see if you must pay this tax.

Many businesses effectively use business-expense deductions to reduce the overall buden of these taxes. Read about how the application of tax deductions and your small business.