State vs Federal Payroll Tax Requirements Explained
Payroll taxes are one of the most regulated and misunderstood parts of running a business. Employers often assume that once federal taxes are handled, they are fully compliant. Unfortunately, that assumption can lead to penalties, audits, and unnecessary stress. Understanding the difference between state and federal payroll tax requirements is essential for business owners who want to stay compliant and protect their cash flow. At Carolina Tax Consulting, LLC , we regularly help companies untangle payroll tax issues before they become costly problems. This guide breaks down everything you need to know in plain language — from what you must withhold to how state rules can vary dramatically from federal laws. What Are Payroll Taxes? Payroll taxes are taxes employers withhold from employees’ wages and taxes employers pay on behalf of employees. These taxes fund federal and state programs such as Social Security, Medicare, unemployment benefits, and income tax systems. Payroll taxes ...