What Is Payroll Tax? | A Complete Guide by Z-Tax & Accounting

Understanding Payroll Tax

If you own a business with employees, you’re responsible for managing payroll taxes — one of the most important parts of running a compliant company. Payroll tax refers to the taxes that both employers and employees must pay based on employee wages and salaries.

These taxes fund critical federal programs such as Social Security and Medicare, as well as unemployment insurance and other state benefits.

At Z Tax and Accounting in Irving, TX, we help businesses of all sizes handle payroll taxes accurately, efficiently, and in full compliance with federal and State laws.

What Is Payroll Tax?

Payroll tax is the tax withheld from an employee’s paycheck by the employer and remitted to the government. It’s made up of several components, including:

1. FICA Taxes (Federal Insurance Contributions Act)
   
   

   • Social Security tax: 6.2% (paid by both employer and employee)
     
     

   • Medicare tax: 1.45% (paid by both employer and employee)
     
     

   • Employers also match these amounts, resulting in a combined rate of 15.3%.
     
     

2. Federal Income Tax Withholding
   Employers must withhold federal income tax from employee wages based on the employee’s W-4 form.
   
   

3. State Payroll Taxes
   Texas does not have a state income tax, but employers still pay Texas Unemployment Tax (SUTA) to fund unemployment benefits. Other States have  Payroll Taxes with state specific  requirements.
   
   

Z Tax and Accounting provides full-service payroll tax processing and filing, ensuring your business meets all local, state, and federal requirements.

Who Pays Payroll Taxes?

Payroll taxes are shared between employees and employers:

• Employees have their portion automatically deducted from their paychecks.
  
  

• Employers are responsible for matching certain contributions and remitting the total to the IRS and state agencies.
  
  

Failure to withhold or pay payroll taxes correctly can lead to costly IRS penalties and compliance issues.

That’s why many Irving, TX businesses and other places including other states rely on Z Tax and Accounting to manage payroll tax compliance with precision and accuracy.

Payroll Tax Filing Requirements

Payroll taxes must be filed and paid on specific schedules, usually monthly or quarterly, depending on your payroll size. Key forms include:

• Form 941: Employer’s Quarterly Federal Tax Return
  
  

• Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return
  
  

• Form W-2: Reports annual employee wages and taxes withheld
  
  

• Form W-3: Transmits W-2 forms to the Social Security Administration
  
  

Z Tax and Accounting ensures all forms are filed correctly and on time, preventing errors and avoiding late filing penalties.

Why Payroll Taxes Matter

Payroll taxes not only fund essential government programs but also help ensure your business operates legally and ethically. Proper payroll tax management helps:

• Avoid IRS penalties and interest
  
  

• Maintain accurate employee records
  
  

• Support employee trust and satisfaction
  
  

• Keep your business compliant with tax regulations
  
  

With Z Tax and Accounting, you can rest assured that your payroll taxes are handled accurately, freeing you to focus on running your business.

Payroll Tax Services in Irving, TX

At Z Tax and Accounting, we provide comprehensive payroll and accounting services to meet the needs of businesses across Irving and the Dallas-Fort Worth area, and beyond in other states including:

• Payroll tax setup and processing
  
  

• Federal and state payroll tax filings
  
  

• Employee wage and deduction reporting
  
  

• Tax deposit scheduling and compliance
  
  

• Year-end W-2 and 1099 preparation
  
  

• Full-service bookkeeping and accounting support
  
  

Whether you have one employee or a large staff, our team ensures that your payroll is processed correctly and your taxes are paid on time.

Final Thoughts

Understanding what payroll tax is and managing it correctly is crucial for every business owner. From calculating withholdings to filing the right forms, payroll tax compliance can be complex — but it doesn’t have to be stressful.

Let Z Tax and Accounting handle your payroll taxes so you can focus on growing your business.

📍 Contact Z Tax and Accounting

Z Tax and Accounting
600 E John Carpenter Freeway, Suite 268
Irving, TX 75062
📞 Call: (214) 699-4790

Z Tax and Accounting — Your Trusted Payroll and Tax Experts in Irving, Texas.