How much does payroll tax cost as percentage of total wages paid out?
Payroll costs generally include the following cost components:
1. Employers share of Social Security Taxes.
This is currently at 6.2%. Your employee payroll does not exceed the FICA limit of $102,000 for 2008, hence all his wages are subject to this tax.
2. Employers share of Medicare Taxes.
This is currently at 1.45%. There is no income limit for this tax.
3. Federal unemployement cost of FUTA taxes.
This could be as low as 1%
4. State Unemployement taxes.
This amount varies according to each State but is also very low approx 1%.
The rough estimate could be around 10% of the total payroll in your case, $36,000 x 10% = $3,600 as employer portion of payroll taxes.
Other Non-Payroll related expenses.
1. State Workmans Compensation.
This could be as low as 4% of Annual payroll for States other than California, where that could be as high as 10%.
2. Payroll processing fee.
This is about $30 for bi-weekly payrolls for 1 employee, plus preparation of quarterly returns and year end W-2 processing another $150-200)