July 15, 2024
Payroll services Australia

Payroll services Australia: the Differences between Payroll Taxes and Employment Taxes? 

Small businesses hire payroll services Australia to help them tackle their payroll issues and yet, many employees aren’t sure how it all works. What you might not realise is that payroll taxes and employment taxes have to be paid and sometimes, employees can think they are footing the entire bill. However, that is not quite the case and maybe it’s time to learn a little more about the differences between payroll taxes and employment taxes. Read on to find out more.  

The Differences between Payroll Tax and Employment Tax 

Both taxes must be paid by each employee and employer. However, the amount of tax being taken out will depend on how much an employee is making. For example, if an employee is making very little, say $6.50 per hour, they will find the employment tax is potentially slightly less than someone earning $16.50 per hour? What’s more, the amount in which a person earns will also depend on the amount of payroll tax being deducted from the pay check. A payroll service will calculate how much a person earns and use that sum to help calculate what payroll taxes are due from the employer. 

Payments and Calculations 

Income or employment taxes are paid by the employee whereas the payroll tax is usually paid in part by the employer. When it comes to unemployment insurance, medical care or social security, these amounts are usually withheld from the employee’s wage but the employer will usually pay that amount to the IRS on your behalf and potentially contribute to the fund as well. The amount in which employees and employers pay in tax will come down to what they earn. In most cases, employees and employers pay the same amount in taxes, with potentially employers paying slightly more. However, the bottom line is they both need to be paid. Payroll services Australia can help to work out the necessary calculations and make payments on the behalf of the employer. 

What about Social Security? 

Social security works a little differently and that can often get people confused. However, what you might not be aware of is that employees will have a certain amount withheld from their wages but that amount is also matched by the employer. In a way, it’s a 50-50 split when it comes to social security and that is something which most people are not aware of. However, calculating the amount of social security owed will come down to what a person earns. A payroll service can usually help with these calculations and ensure the right amount if being paid.  

Making It Less Complicated 

Understanding payroll taxes, employment taxes and everything else can be very complex and complicated! You can often find that there are shares to how each tax is paid and it is not just the employee who foots the bill. There are many who will find businesses pay their fair share too and that can be important for a host of reasons. However, businesses can often require help from payroll services Australia in order to ensure the right deductions are made which can also be very important.