Payroll Taxes

The taxes that are to be deducted from each employee check have to be set up in the Payroll Tax Codes file. This file will include the Federal, FICA (Social Security), and Medicare taxes as well as any State Income tax codes and local tax codes.

Tax Type
The available tax types are:

Federal Withholding Tax

Social Security Tax

Medicare Tax

State Withholding Tax

Local Tax

Choose the type of tax you are adding to the system. The Federal Withholding Tax, Social Security Tax and Medicare Tax are mandatory. They should already be defined in the system. If they are not, please call SherWare, Inc. technical support.

There can only be one instance of a Federal Withholding Tax, FICA and Medicare tax type. If you try and add a new record and specify that it is one of these three tax types, the system will automatically erase your changes and bring up the existing record.

In addition to the three mandatory taxes mentioned above, two local taxes will always show on the enter payroll under the Taxes section. They will always be called Local Withholding 1 and Local Withholding 2 regardless of the name you give it in the Payroll Taxes .

State
If the tax code is defining a state withholding tax, choose the state. This box will be disabled unless the tax type is specified as a State Withholding Tax.

Tax Desc
Enter a description for the tax. This description will print on the employee's check stub and payroll reports. The description can be up to 20 characters long. This field is required.

Tax Rate
The rate of this tax. This box will be disabled for Federal and State Withholding taxes, since those rely on separate tax tables for their calculations.

Wage Limit
The maximum wages for which this tax will be charged. After an employee's wages go over this point, they will no longer be subject to this tax. This box only applies to the Social Security (FICA) tax, and will be disabled for all other tax types. Each year, updated tax tables will be available on the SherWare, Inc. Web site, but the wage limit for Social Security will need to be changed on this each year.

State Tax ID
If this is a state withholding tax, enter your company state tax ID in this box. It will be disabled for all other tax types.

Employee Liability Account
Enter the liability account that gets posted with the employee's share of this tax. All of the taxes will require this account to be defined. The account can be chosen by typing it in, pressing the F2 key or by clicking on the Account Lookup button.

Company Liability Account
If your company is subject to paying a portion of this tax, enter the liability account number that to which your company's portion is posted. The only known taxes that would require this account are the Social Security Tax and the Medicare Tax. The employer is responsible for paying half of each of these taxes.

Company Expense Account
If your company is subject to paying a portion of this tax, enter the expense account number that your company's portion is posted to. The only known taxes that would require this account are the Social Security Tax and the Medicare Tax. The employer is responsible for paying half of each of these taxes.

PLEASE NOTE: You will notice that as you add state withholding records, the words "** Tax Table Supplied **" appear on the . This is done to inform you of the states that have their tax tables included in the software. If you add a state record and do not see this message, contact SherWare, Inc. technical support for an updated tax table.