Payroll taxes include both state and federal taxes that a business is required to withhold and/or pay on behalf of employees. Employers are required to withhold state and federal income taxes as well as social security and Medicare from their employees’ wages. Employers are also required to pay social security and Medicare taxes and State and Federal Unemployment Taxes.

Businesses must have the proper payroll tax accounts and ID’s established within a state where your business has employees. Locating the proper application to apply for the appropriate taxes can be complicated. The application process for each state’s payroll tax registration varies greatly. Some states, including California and New York, allow businesses to register for both withholding and unemployment tax using one application. The majority of states, however, require two separate applications to be submitted to separate governmental agencies in order to become properly registered as an employer.

Penalties for failure to properly file withholding and unemployment tax are generally monetary. The penalty assessment depends on the scale of the business, the untimeliness of the payment and past reporting history.