Employment Taxes

You may not think of employment taxes as an employee benefit, but you do pick up the tab for certain government-administered benefits. you're obligated to make these payments on behalf of your employees by state and federal laws.

FICA. The Federal Insurance Contributions Act (FICA) requires you to pay the employer’s portion of both a Social Security tax and also a Medicare tax. And, you have to incur the expense of withholding the employee’s portion of these taxes from each employee’s wages and remitting them to the government.

FUTA. The Federal Unemployment Tax Act (FUTA) requires you to pay a federal unemployment tax when you have employees. Employees don't pay any part of FUTA taxes.

States also have unemployment taxes that you'll likely have to pay. The amount of those taxes is dependent on your experience rating; that is, how frequently your ex-employees claim unemployment benefits. The rules in every state are at least as broad in scope as the federal rules so, if you're paying FUTA, you'll also be paying state unemployment taxes.