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How to report payroll tax in California

On: May 15, 2020

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If you are a business owner in California that has employees then you are probably familiar with the payroll tax. Usually taken out automatically by an employer, the payroll tax is a series of taxes that go to various state and federal agencies and programs. While it may seem like a pain, it is a vital part to how our country operates. When it comes time to start reporting your taxes, here are a couple of things you should know. How to report payroll tax In California, you would report your payroll taxes electronically to the Employment Development Department through the Quarterly Contribution Return and Report of Wages (DE 9) and Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C), which is found on their website.  Employers with 10 or more employees are required to electronically submit employment tax returns, wage reports, and payroll tax deposits to the EDD during the correct time. The payroll taxes are reported four times during the year through a quarterly system.  When you are reporting the payroll tax, it is important to report all wages that are given out to employees. Wages are all compensation for an employee’s personal services, whether they are paid by cash, payroll check, personal check, noncash payments (i.e., meals and/or lodging), and tips. It is also important to keep records of all payroll related items such as time cards, records of payments/payroll records (payroll check, personal check, cash, cannabis, meals, and tips), and any other information that is necessary. It is important to note that employers are required to keep payroll records for a minimum of four years. What else do I need to know about payroll tax? In California, there are four state payroll taxes that your money will go to. These taxes are the unemployment insurance (UI) tax, employment training tax (ETT), state disability insurance (SDI) tax, and California personal income tax (PIT), all of which are paid to the Employment Development Department. These taxes are usually taken out by the employer automatically and paid by them to the correct agencies. Make sure to always have a good record of the payments and all payroll taxes that are taken out and paid. Most tax agencies require at least three years of data going back, so in the case of an audit, you can get them easily and quickly. Also developing a habit of filing all your taxes on time and in the correct manner can help go a long way. Not filing can not only increase the likelihood that you will end up getting audited or receive a penalty, but it is a good business practice to develop going forward to make sure you send in everything on time. Finally, It is also important to note that every California employer must report any information about their new employees to the California New Employee Registry within 20 days of their first day of work. This is vital to keeping your business in the clear, as failure to do this or any of the other things mentioned can get you into a lot of trouble and cost a lot of money.

Always make sure to call Leading Tax Group and don’t attempt to do it yourself.

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