Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 37

• • Federal Withholding Exemption Certificate (W-4) from the IRS at: www.irs.gov/pub/irs-pdf/fw4.pdf or 800.829.4933 MI-W4 from the Michigan Department of Treasury at: www.michigan.gov/documents/mw4f_76761_7.pdf or phone 517.636.4660. Federal: Based on the W-4 certificate’s information provided by the employee, an employer withholds a certain amount of taxes from the employee’s wages. You may be required to deposit the federal taxes collected. One must file quarterly returns with the IRS and file an annual reconcilement of the quarterly returns. If returns are neglected or filed improperly, penalties and excess payments may be levied. For more information about federal income tax withholding, contact the IRS at 800.829.4933 or online at www.irs.gov Social Security and Medicare: In addition to federal income taxes, federal law also requires that employers with- hold (and deposit) Social Security taxes from employees’ wages. The employer must also pay an equal amount. The FICA tax rate paid by both employer and employee is the combination of social security tax rate of 6.2% and the Medicare tax rate of 1.45% for a total of 7.65% (for 2017 at time of publication). Tax rates and maximum earnings subject to tax may vary from year-to-year. The latest information is available at: www.irs.gov or phone 800.829.4933. State: Based on the MI-W4 certificate’s information provided by the employee, an employer withholds a certain amount of taxes from the employee’s wages. State filing requirements may vary based on the amount of state taxes withheld. “Michigan Business Taxes: Registration Booklet” is available online at www.michigan.gov/ documents/518_3620_7.pdf • Prior to hiring employees, an employer must register online for taxes at https://mto.treasury.michigan.gov or offline by completing the paper Form 518 included in the “Michigan Business Taxes: Registration Booklet” at www.michigan.gov/documents/518_3620_7.pdf or by contacting Michigan Department of Treasury at 517.636.4660. • Once registered, employer will be provided with instructions for filing and completing necessary forms. Anannual return is also required. Michigan’s withholding tax tables are available from the Michigan Department of Treasury at 517.636.4660 or online at: https://mto.treasury.michigan.gov City or Local: Contact the city treasurer to determine if a city income tax is applicable for the new employees. If the city does have an income tax, the city treasurer can provide the required registration forms and any information that is needed. Federal Unemployment Insurance Act The Federal Unemployment Insurance Act gives authority to the IRS to collect fees, and for the U.S. Department of Labor to pay administrative expenses, for operating the state unemployment systems. If you file an “Application for Employer Identification Number” (EIN) with the IRS and indicate that employees will be hired, the IRS will mail a packet of information that includes coupon forms for FUTA tax deposits and an Annual Report form. For more information about the FUTA tax, forms and deposit requirements, contact the IRS at 800.829.4933 or online at www.irs.gov State Unemployment Insurance The Unemployment Insurance Agency (UIA) operates Michigan's unemployment insurance program which collects unemployment taxes from employers and provides temporary income for workers who are unemployed through no fault of their own. Both state and federal unemployment taxes are paid by employers and no deductions can be made from an employee’s wages to cover these taxes. • Any business that employs one or more persons in Michigan is considered a contributing employer and required to register with the Unemployment Insurance Agency. UIA offers an online process to register for and receive your UIA Employer Account Number — faster, easier, more convenient than mail-in paper. With online registration, you can receive your UIA Employer Account Number in less than 3 days. To register online go to: www.michigan.gov/uia/0,1607,7-118--89978--,00.html 35