Most entrepreneurs start their own companies because they have a passion for their business, they want to be their own boss or a combination of the two. Some might also be motivated by the possibility of creating jobs for others, and in the process, helping their local economy and community.
But, you’d be hard pressed to find an entrepreneur who was excited about processing payroll for those employees. Sure, you want to pay all of your workers a fair wage, but payroll can become complicated.
Small business owners have multiple tax obligations, and there are likely several acronyms you’ve never heard before that you need to know for your business taxes.
In that alphabet soup, you’ve probably come across the terms SUTA and FUTA, or State Unemployment Tax Act and Federal Unemployment Tax Act. If you only worked previously as an employee at a larger company or were self-employed, these taxes were not something you worried about.
In many states, SUTA and FUTA are not posted to your pay stub because the cost is paid in full by the employer.
However, if your small business has grown to the point where you now have your own employees, FUTA and SUTA are expenses you’ll need to factor into your payroll processing. But, just what do those acronyms mean, and how exactly will it impact your small business’s books?