payroll taxes
When you look at a payslip, the number you take home is smaller than the salary you were promised. Several chunks have been carved out along the way, and many of them are payroll taxes — taxes tied specifically to wages and employment, most often used to fund social programs like public pensions, health care, and unemployment insurance.
Payroll taxes come in two parts. The employee portion is withheld from the worker's gross pay — the employer subtracts it and sends it to the government on the worker's behalf, so the worker never touches that cash. The employer portion is an extra cost the employer pays on top of wages, out of its own pocket, calculated as a percentage of payroll. Suppose a worker earns 5,000 a month, with 7.65 percent (say 382) withheld as the employee's share, and the employer owes a matching 7.65 percent (another 382). The worker takes home less than 5,000, and the employer's true labor cost is more than 5,000 — the gap on both sides is payroll tax. Income tax withholding often rides alongside these on the same payslip, though strictly it is income tax, not a payroll tax.
Payroll taxes create real bookkeeping obligations. The amounts withheld from employees and the employer's own share both become payroll-tax liabilities — money the business holds and must remit to the government by set deadlines, usually monthly or quarterly. The employer's portion is also a genuine business expense, part of the cost of employing people. Getting payroll taxes wrong is one of the most common and most penalized small-business mistakes, because the government treats withheld employee money as funds held in trust, not the company's own.
On a 5,000 monthly wage, the employer withholds 382 from the employee and owes a matching 382 of its own. It records wages expense of 5,000, payroll tax expense of 382, and a liability of 764 owed to the government (382 + 382) until remitted.
Part of payroll tax is withheld from the worker; part is an extra cost paid by the employer.
Payroll tax withheld from employees is not the company's money — it is held in trust for the government, and spending it to cover other bills is a serious offense, often with personal liability for owners.