The good news about running a business in Florida is there’s no state income tax. That means you don’t have to withhold or remit state income tax from employee paychecks. That’s one less filing and one less system to deal with compared to most other states. But you still have several federal and state obligations that add up.

FICA taxes are the biggest piece. Social Security tax is 6.2% of each employee’s wages, and you as the employer match that with another 6.2%. That applies on wages up to $168,600 for 2024. Medicare tax is 1.45% from the employee and 1.45% from you, with no wage cap. There’s also an additional 0.9% Medicare tax on employee wages over $200,000, but that part is employee-only with no employer match.

Federal income tax withholding is the employee’s obligation, not yours. But you are responsible for calculating the right amount based on their W-4, withholding it from every paycheck, and depositing it with the IRS on time. If you fail to withhold or deposit correctly, the IRS can hold you personally liable through what’s called the trust fund recovery penalty. This is one area where getting payroll system setup right from the start really matters.

FUTA is the Federal Unemployment Tax. The rate is 6.0% on the first $7,000 of each employee’s annual wages. Most employers receive a credit of up to 5.4% for paying state unemployment tax on time, which brings the effective FUTA rate down to 0.6%. That works out to a maximum of $42 per employee per year. It’s not a huge number, but you still have to track it and file Form 940 annually.

Florida Reemployment Tax is the state’s version of unemployment insurance. New employers typically start at a rate of 2.7% on the first $7,000 of each employee’s wages. Over time your rate adjusts based on your experience rating, which reflects how many former employees have filed unemployment claims against your account. Rates can range from 0.1% to 5.4% depending on your history. You file and pay this quarterly using Form RT-6 through the Florida Department of Revenue.

Deposit schedules for federal payroll taxes depend on the size of your payroll. Most new businesses are monthly depositors, meaning FICA and withheld income taxes are due by the 15th of the following month. As your payroll grows, the IRS may move you to a semi-weekly schedule. Missing deposit deadlines triggers penalties that accumulate quickly, so staying on top of timing is just as important as getting the amounts right.

On the reporting side, you file Form 941 with the IRS every quarter to report federal income tax withholding and FICA. You file Form 940 once a year for FUTA. Florida reemployment tax gets filed quarterly. And at year end, you issue W-2s to every employee and file copies with the Social Security Administration.

Florida’s lack of a state income tax makes payroll simpler than in many states, but there are still enough moving pieces to trip up a business owner who tries to manage it all manually. If payroll is something you’d rather hand off or at least get set up correctly from the beginning, working with an outsourced bookkeeping team in Jacksonville can take the guesswork out of it and keep you compliant from day one.