Updated January 11, 2021
According to the Small Business Association, 99.2% of businesses in California are classified as “small businesses.” Whether you run an ice cream stand along the boardwalk or the tiny startup that will one day change the world, there’s one thing all California small business owners have in common: payroll taxes. Figuring out how to pay employees can be a huge hassle, but our payroll calculator simplifies the process so you can spend more time focusing on making your small business the best it can be.
To figure out your California payroll withholding and federal payroll taxes, just enter wage and W-4 allowances for each employee below. Our calculator will calculate gross pay, take out deductions, and come up with the net pay you’ll need for writing your employees’ paychecks.
If any of this terminology is confusing, don’t beat yourself up. Calculating payroll taxes is one of the last things a lot of employers want to think about — especially in a state like California that has numerous state taxes to sort out. If it helps, we also have guides to help small business owners learn more about the payroll process.
You can use our California payroll calculator to figure out your employees’ federal withholding as well as any additional taxes you are responsible for paying as the employer.
Here’s a quick overview of what you need to know when you’re calculating federal payroll taxes. If you would like to get into each calculation in detail, check out our step-by-step guide.
Once you have all your withholding figured out, there are a series of quarterly and annual payroll tax filings you’ll need to perform. But before you write out your paychecks, you’ll need to calculate and withhold California state taxes as well.
Now that we’re done with federal income taxes, let’s tackle California state taxes. The State of California wins for the highest top marginal income tax in the country. It’s a progressive income tax, meaning the more money your employees make, the higher the income tax. The following graph gives insight into the varied tax rates in place for single filers.
|California Taxable Income||Rate|
More information can be found on the California Franchise Tax Board website.
The Golden State has four state payroll taxes administered by the Employment Development Department (EDD): 1) Unemployment Insurance, 2) Employment Training Tax, 3) State Disability Tax, and 4) Personal Income Tax. You’re responsible for paying half of those taxes, while the other half should be withheld from each employee’s paycheck. Details and rates can be found on the EDD website.
You can register and pay taxes online through your EDD account here.
Feel that wave of relief? You’ve checked “payroll taxes” off your to-do list so you can move onto the important things. Once each employee’s net pay is calculated (taking deductions and withholdings into consideration), you’re in the clear. All you have to worry about is getting your employees paid on time as well as setting aside whatever you owe in FICA and UI taxes. Those numbers can add up quickly!
Our calculator is here to help, but of course, you can never learn enough, especially when it comes to payroll taxes. Here are some additional resources and contact information to help you run California payroll:
Franchise Tax Board (payroll tax assistance): (800) 852-5711
Being a California employer isn’t always easy. If you want to take some of the administrative burdens off your shoulders, there are a number of terrific payroll software companies that can do all the heavy lifting for you.