“Payroll Tax Exemption” Debunked
Payroll services can be of great help to businesses looking to outsource their current payroll to a professional. Sometimes there can be confusion on the part of the business owner as to what counts as an actual exemption for payroll tax and what doesn’t. Professionals are able to help you and your business understand this seemingly complicated process.
Understanding Payroll Taxes
In order to know what counts as payroll tax exemption, it is vital to understand the meaning of payroll taxes first. Payroll tax is simply the state or federal tax that is taken as part of what your business pays its employees, and is based on the wages that you pay out each year. There is a certain level of pay, or a threshold if you will, that is stated for each company based on where they are at currently. If the business exceed this threshold, then they are responsible for paying what is due to the federal government for the year.
By using payroll outsourcing, you are able to save your business and your employees a lot of hassle. With the help of a professional, you should be able to better understand the threshold laws as well as stay within them with ease.
Defining Payroll Tax Exemption
There is much confusion going around about being able to claim a payroll tax exemption. The difficulty with this is that just because your business may be under the threshold for payroll tax doesn’t mean that your business is exempt from the payroll tax altogether. If you are not aware of this, you could be considered as evading the law and face huge fines later on for it.
The tax threshold varies depending on the size of your business, but should always be kept an eye on. This is because if your business has unprecedented growth within the next year, you could very well end up paying for this tax anyway. It would also count for the whole year, not just the period of time that your business went over the threshold, so it is vital to begin setting aside the 5.45% of what would be due should your business surpass the payroll tax threshold. Payroll outsourcing is a great way to stay on top of all of this for your business.
Does Your Business Qualify?
There are very specific guidelines for what businesses can claim an actual payroll tax exemption. For the most part, this includes the following list of organizations:
- Churches and Religious Organizations
- Government Departments
While this list may actually vary depending on where you live and the laws that govern that area, it is most likely that you will not qualify for the exemption unless you have an organization that falls under this list. Professionals in payrollserviceaustralia.com.au will also be able to help you clear up any concerns you may have.
This should definitely help to clarify any confusion and make it much clearer to you as a business owner what your true responsibilities are so that you don’t fall into a trap of believing that you qualify for an exemption only to find out later and face audits for it. We are committed here at payrollserviceaustralia.com.au to helping you lead a more financially savvy business. For more details read our article https://www.the-ice-cream-maker.com/payroll-tax-thresholds-limits/