IRS Tax Center: Employees, Withholding and Contractors
Small Businesses with Employees
The IRS provides information specifically for small businesses with employees. This section features articles about hiring, recordkeeping, minimum wage, benefits, retirement plans, Americans with disabilities, Social Security number verification, federal unemployment insurance taxes and wage reporting.
Employees vs. Independent Contractors
Before you can determine how to treat payments your business makes for services, you must first know the business relationship that exists between you and the person performing the services. The person performing the services can either be considered an employee or an independent contractor. This determination must follow IRS guidelines.
Employment Tax for Small Business
If you have employees, you are responsible for federal income tax withholding, Social Security and Medicare taxes, and Federal Unemployment Tax Act (FUTA). Certain businesses are also required to pay the self-employment tax, a Social Security and Medicare tax primarily for individuals who work for themselves.
Welcome to the IRS Withholding Calculator
An easy-to-use calculator can help you determine your employees' federal income tax withholding so you can withhold the correct amount from their pay. Employees will also find this calculator to be useful if they need to adjust their withholding to reduce their tax refund or otherwise adjust their balance due.