Payroll for small business, explained

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What payroll includes

• You withhold from employees: federal income tax, state income tax, and their 7.65% FICA share.
• You pay as the employer: a matching 7.65% FICA, FUTA (0.6% on the first $7,000 after the state credit), and state unemployment tax.
• You file Form 941 quarterly, Form 940 yearly, W-2s by Jan 31, plus state returns.

Three ways to run it

1. DIY with IRS tables. It's cheap but error-prone, and penalties apply for late deposits.
2. Payroll software. For example, Gusto Simple costs $49/mo + $6/person and files taxes for you.
3. An accountant or bookkeeper. Most hands-off, usually the priciest.

Budget first with the true cost calculator.

See Gusto plans

Sources: IRS FICA, IRS FUTA, IRS due dates, Gusto pricing. Updated Nov 2, 2026. Not tax or legal advice.