What are employment taxes? What are Social Security taxes and how do these taxes

Question

What are employment taxes? What are Social Security taxes and how do these taxes work?   Does it make a difference if you are self-employed, or employed by a business? If you are a lender, do you think you may rely on any payroll data to assess business solvency? How about the rest of liabilities a business may have recorded? Does it make a difference if it is short-term or long-term liability? Would you please, provide us with links to some real financial statements of a business of your and provide your analysis of the business's liabilities.

Explanation / Answer

Ans.)

a) The term "employment taxes" to refer to a list of taxes that relate to employees. The list of "employment taxes," refers to:

All of these taxes (except self-employment tax) must be paid by employers, either through withholding or by direct payment, or both. In addition, one other tax might be considered as part of the "employment tax" family of taxes, specifically worker's compensation payments, which are run by the states.

b) A Social Security tax is the tax levied on both employers and employees used to fund the Social Security program. Social Security tax is usually collected in the form of payroll tax or self-employment tax. The Social Security tax pays for the retirement and disability benefits

The funds collected from employees for Social Security are not put into a trust for the individual employee currently paying into the system, but rather are used to pay existing retirees. Also, Social Security tax can refer to the tax on the benefits received from Social Security. In the past, Social Security was tax free, but today if you have other substantial income along with your benefits, you will likely end up paying some tax on them

c) Its very important to understand the difference between a “business” and “self-employment”.

1) Self-employment is basically a job… the only difference is that you no longer have a boss. You are both the boss and the employee.

2.)A true business is different. It is not the same as a job. A business is an organization of systems. It continues to work even when you are not working or present. You create systems by automating your business and/or training others to do parts of it. Your goal is to create a business that can run without you.

d) It is not possible to assess solvancy of the business only go through payroll Data because in business enterprise contains not only a Employee liabilities but also have another liabilities.

e) All other liabilities are recorded based on nature of liability , Period of liability ....etc.

f) Money that a business owner must pay to a creditor within 12 months of the balance sheet date is a short term liability.Long-term liabilities are due more than a year after the balance sheet date. These include notes and bonds payable, long-term rent, pensions and other benefits.

g) Dear Student i am unable to produce real business financial statements because there is restrictions with respect to confidentiality as per various legal regulations. even if u required please go through the web browsing u will find.

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