How much tax does an LLC pay?
Discussing taxes in relation to a Limited Liability Company (LLC) in the United States involves understanding the different structures and tax obligations surrounding such entities.
If you are about to start your business in the United States, surely you have heard about the Payroll.
It is an important aspect for the legal development of your company when it comes to hiring personnel.
The Payroll is nothing more than the labor contributions related to a salary contract between a company incorporated in the United States and an American citizen or resident.
These contributions have a surcharge of approximately 12% additional to the accrual of the salary agreed for the employer, segregating their payments to the following concepts:
1. Federal Holding
2.Social Security. 12.4% of salary for the year 2020. This contribution is assumed by 50% by the employer and 50% by the service provider.
3. Medicare. 3.9% of the salary for the year 2021. Like Social Security, 50% is assumed by the employer and 50% by the service provider.
4. Federal Unemployment. It has a maximum contribution of 42 USD, which translates as 0.6% of the maximum value in salary earned from the contribution (7,000 USD). This value is assumed only by the employer.
5. State Unemployment. It has a maximum contribution of 189 USD, which translates as 2.7% of the maximum value in salary earned from the contribution (7,000 USD). This value is assumed solely by the employer.
Before and after the disbursement and withholding for labor contributions, both the employee and the employer must meet certain requirements:
a) The employer or contractor must register their business in order to receive their employer identification number (EIN) with the IRS.
b) The employer or contractor must register the company in the state where it was established and where the contract is actually carried out.
c) The employer or contractor must report to the state the data of the people hired under this corporate figure.
d) The service provider (employee) must fill out and deliver to the employer or contrast the W-4 form, which will serve as the Withholding Certificate.
e) The employer or contractor must provide the employee or service provider with details of the contributions withheld from the salary earned so that the collaborator is aware of the deductions made.
f) The employer or contractor must provide the employees the Form W-2 every year end. It indicates the total amount of taxes withheld during that year. Said Annual Tax Form must be filed before April 15 of each year.
g) The employer or contractor must comply with the presentation and payment of taxes on a quarterly and annual basis depending on the case and the state, reporting the different forms associated with the management.
The minimum wage in the United States is 7.25 USD per hour. However, each state is autonomous in determining regulations related to employee pay.
Employees paid by the hour, who work overtime, must be paid 1.5 times their normal hourly rate depending on the case and what was agreed upon at the time of hiring.
There are no set limits on hours worked, as long as non-exempt employees are paid 1.5 times their normal rate for hours worked over 40 in a week.
While there is no federal obligation that binds the employer or contrasts to paying for these non-work days, paid leave is required in most states under certain circumstances. On the other hand, it is very common for employers to pay these days as a sign of gratitude and corporate fidelity.