For better or worse, payroll costs more than the amount you pay employees each pay period. For each employee you hire, you're required to deduct payroll taxes—income, Social Security, and Medicare taxes—and match the Social Security and Medicare taxes in kind.
Fortunately, once you figure out the basics, deducting the right amount from an employee's hourly or salaried paycheck is pretty straightforward (at least, as straightforward as anything involving taxes can be). Unfortunately, the learning curve is pretty steep.
You can always opt out of the trickiest parts of calculating payroll taxes by subscribing to full-service payroll software. But if payroll software isn't in the budget right now, or if you have just one or two employees and would rather calculate taxes by hand, we have you covered. Keep reading: we explain what payroll taxes are so you can make sure you're following the tax code to a T.