Payroll Tax Compliance Checklist
Payroll taxes are one of the most complex parts of running a small business. Missing a deadline or underpaying can lead to penalties. This Payroll Tax Compliance Checklist breaks down everything you need to track — from quarterly filings to year-end reports.
Step 1 – Federal Payroll Taxes
- Withhold federal income tax from employee paychecks.
- Withhold Social Security and Medicare (FICA) contributions.
- Deposit federal payroll taxes via EFTPS.
- File Form 941 (quarterly) or Form 944 (annual, if qualified).
Step 2 – State & Local Payroll Taxes
- Register for state withholding accounts.
- Deposit state income taxes (frequency varies by state).
- Pay State Unemployment Insurance (SUI/SUTA).
- Check for city/county payroll taxes.
Step 3 – Federal Unemployment Tax (FUTA)
- Calculate 0.6% FUTA on the first $7,000 of each employee’s wages.
- Deposit FUTA taxes (quarterly if liability > $500).
- File Form 940 annually.
Step 4 – Quarterly & Annual Filings
- Quarterly: Form 941 (federal), state equivalents.
- Annual: Form 940 (FUTA), W-2/W-3 (employees), 1099-NEC (contractors).
- Double-check due dates (IRS, state agencies).
Step 5 – Payroll Tax Recordkeeping
- Keep tax payment confirmations.
- Retain filed returns (941, 940, W-2, 1099).
- Store payroll registers and reports for at least 4 years.
Download the Payroll Tax Compliance Checklist PDF
Get the printable version here: Download Payroll Tax Compliance Checklist PDF
FAQs
How often do I deposit payroll taxes?
Most small businesses deposit either monthly or semi-weekly, depending on IRS guidelines.
What happens if I miss a deposit deadline?
The IRS may assess penalties ranging from 2% to 15% of the unpaid amount.
Do I need to file payroll taxes if I only have contractors?
You don’t file payroll taxes for contractors, but you must issue 1099-NEC forms at year-end.
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Related Checklists
If you’re handling payroll for multiple states, you may also need our Payroll Tax Compliance Checklist and Payroll Recordkeeping Checklist
