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Insurance offered through OnPay Insurance Agency, LLC (CA License #0L29422)
Updated: January 6, 2023
Every first Saturday in May, Churchill Downs hosts “The Most Exciting Two Minutes in Sports.” On top of having the Kentucky Derby, the state has some awesome college basketball teams. And of course, Louisville Slugger has been making baseball bats since 1884. If you’re an adrenaline junkie, Kentucky has plenty of adrenaline to give.
As a small business owner, you’ve got some unwanted adrenaline when it comes to payroll taxes. That’s where we come into play. We designed a nifty payroll calculator to help you avoid any payroll tax fiascos. The process is simple. All you have to do is enter each employee’s wage and W-4 information, and our calculator will process their gross pay, deductions, and net pay for both federal and Kentucky state taxes.
First and foremost, we have to give Uncle Sam his due. We’ll go through a quick overview of what you need to know when it comes to calculating federal payroll taxes. If you would like to see a more detailed explanation, we invite you to head on over to our comprehensive step-by-step guide.
Now that we’re done with federal taxes, let’s talk about Kentucky state taxes, shall we?
The state used to have a range of tax rates, but it simplified the tax code and now charges a flat rate of 5% for all residents.
In addition, depending on where in Kentucky your employees live or work, certain cities also levy local occupational taxes. You can view a list of tax districts on the Secretary of State’s website.
As an employer, you’re responsible for paying state unemployment insurance, which covers those unemployed through no fault of their own. The wage base is $11,100 for 2023, and rates range from 0.3% to 9%
If you’re a new employer, you’ll pay a flat rate of 2.7%. Unless you’re in construction, then your rate is 10%.
Remember, paying your SUI in full and on time qualifies you to get a whopping 90% off of your FUTA tax bill, so make sure you pay attention to the due dates.
And down the stretch, you come! All that’s left to do after calculating your employee’s net pay is cut those checks. Just make sure you’re setting aside the amount your company needs to pay to avoid any FICA and UI tax fiascos.
You will need to use Form 941 to file federal taxes quarterly, and Form 940 to report your annual FUTA tax. You can pay taxes online using the EFTPS payment system. More details about employment tax due dates can be found here.
Here are a couple more links that we think will help you with your payroll needs.
These rates are based on local legislation and can change at any time. Always consult a tax professional if you are unsure about your obligations.
Try OnPay out yourself to see how easy payroll and HR can be. To get started, just share a few basic details about your business. Our team of pros will set everything up and import your employees’ information for you.