Final answer:
Employers are responsible for managing payroll taxes by deducting Social Security and Medicare from employee wages and contributing equalling amounts to these programs. They also pay taxes for social security, unemployment, and disability insurance based on the employee's wages and contribute to pension insurance, if applicable.
Step-by-step explanation:
Understanding Employer Payroll Responsibilities
Employers must manage payroll taxes, which are divided into two main categories: deductions from an employee's wages and taxes an employer pays based on these wages. For deductions from an employee's wages, this includes Social Security at 6.2% and Medicare at 1.45%, which are visible as deductions on an employee's paycheck. However, employers also contribute an equal amount to these programs, which, according to some economists, are indirectly paid by employees through potentially lower wages. On the other side, taxes paid by an employer include their contributions to social security, unemployment, and disability insurances, all based on the employee's wages.
Employers also contribute to the Pension Benefit Guarantee Corporation if they offer pension plans to ensure pensions can be paid even if the company becomes insolvent. In the United States, payroll taxes are assessed by federal, state, and local jurisdictions, and employers are obligated to report and remit these taxes regularly, with many jurisdictions now requiring electronic reporting. Failure to properly manage these taxes can lead to severe penalties and interest charges, making accurate payroll management critical for businesses.