Social Security Tax Limits for 2011, 2012

Do you own a small business and need to know what you are responsible for when it comes to payroll taxes, and more specifically Social Security taxes and Social Security tax limits?

As an employer, you are not only responsible for withholding Social Security tax from your employee’s wages, but you are also responsible for paying in on your employee’s Social Security tax. There is a Social Security tax limit, which is 6.2% on earnings up to $106,800; you, as the employer, must also match the same amount. Under the guidelines of the Social Security tax limit, the maximum amount employees and employers will each pay is $6,621.60 in 2010.

When you pay Social Security tax, the employee will receive credits. For 2010, they would receive 1 credit for paying in $1,120. The maximum number of credits anyone can earn in a year is 4. The credits are used in determining your eligibility for collecting Social Security when you retire.

Payroll taxes can be difficult to determine and must be precise within the requirements of each tax to be paid by employers and withheld from employees. Deducting payroll taxes is the sole responsibility of the employer.

There are services available to you to calculate both the amount
owed for various taxes and the amount to be withheld. I would suggest QuickBooks Online Payroll. They offer a 30-day trial along with a very low monthly rate if you want to continue the service.

Once you are signed up, QuickBooks will walk you through step by step in setting up your employees and their withholdings. You can then set up payday in 3 easy steps. The first step is to create the paycheck by entering the number of hours the employee has worked. The second step allows you to approve the paycheck. The third and final step is to pay the employee; you will have the option to pay by check or by direct deposit.

QuickBooks offers a variety of services for employers in saving time and staying organized. I have found this to be the best small business software available that will cover all aspects of your business. The following are some features for QuickBooks online basic software:

• Create / track invoices
• Review 40 different standard reports
• Access your account via an iPhone, Blackberry or an Android device.
• Import customer contact list to Excel, Outlook, or Gmail.

For answers to your payroll tax questions including Social Security taxes, the Social Security tax limit, payroll tax withholdings and more, visit QuickBooks Online Payroll.