Calculating payroll taxes for employees is a complex yet vital process in any business. It involves accounting for the amount of money that must be set aside for federal, state and local taxes from each employee’s paycheck. It also requires calculating deductions like Social Security, Medicare, unemployment insurance and other contributions such as 401(k) contribution, employer health insurance premiums, etc. The primary purpose behind calculating payroll taxes is to ensure that the taxes are calculated accurately and consistently in compliance with applicable laws, so businesses can avoid penalties due to incorrect calculations or late payments.