Payroll taxes are the taxes paid by an employer on behalf of their employees. This includes federal, state, and local taxes withheld from employee paychecks. Calculating payroll taxes requires a business to accurately track their employees’ wages and determine what taxes must be paid. The employer is responsible for withholding, reporting, and paying all applicable payroll taxes to the proper tax authorities. Calculating and complying with payroll taxes can seem overwhelming, but it’s an essential part of running a successful business. Being proactive about your payroll taxes helps avoid costly penalties for mistakes or late payments.