Payroll and equity Updated November 2026

Employer payroll taxes

Employer payroll taxes are a company expense on top of gross wages: the employer matches the employee's Social Security (6.2%) and Medicare (1.45%) and pays federal (FUTA) and state (SUTA) unemployment tax. The entry debits Payroll Tax Expense and credits a payable for each tax.

Syntax

Dr Payroll Tax Expense / Cr FICA Social Security Payable, Cr FICA Medicare Payable, Cr FUTA Payable, Cr SUTA Payable

Part	What it is
`Payroll Tax Expense`	Operating expense for all employer-paid payroll taxes.
`FICA Social Security Payable (employer)`	6.2% of wages up to the annual wage base, matching the employee amount.
`FICA Medicare Payable (employer)`	1.45% of all wages, matching the employee amount.
`FUTA Payable`	Federal unemployment tax, 0.6% (after state credit) on the first 7,000 of each employee's wages.

Examples

Dr Payroll Tax Expense 1,365 / Cr FICA Social Security Payable 620, Cr FICA Medicare Payable 145, Cr FUTA Payable 60, Cr SUTA Payable 540

Result: Employer cost of the 10,000 payroll rises to 11,365

Gross wages 10,000, all under the wage bases: 6.2% + 1.45% + 0.6% + 5.4%.

Dr FICA Social Security Payable 1,240, Dr FICA Medicare Payable 290, Dr Employee Income Tax Payable 1,500 / Cr Cash 3,030

Result: Federal payroll tax deposit made

Employee and employer FICA (620 + 620 and 145 + 145) plus income tax withheld remitted together.

Dr Payroll Tax Expense 765 / Cr FICA Social Security Payable 620, Cr FICA Medicare Payable 145

Result: Only FICA match for the period

Late in the year, once every employee has passed the 7,000 FUTA/SUTA wage base, no unemployment tax is due.

Common mistakes

Withholding FUTA or SUTA from employees: unemployment taxes are paid by the employer only (a few states have small employee SUTA contributions).
Charging unemployment tax on all wages all year: FUTA stops at 7,000 per employee and SUTA at the state wage base.
Combining the employer tax entry with the payroll entry: keep them separate so wages expense and payroll tax expense are reported on their own lines.

Practice Employer payroll taxes

These drills check your answer on live data, free, no account needed.

Employer payroll taxesFor the same $48,000 payroll, Northgate Print Shop must pay employer Social Security tax at 6.2% and Medicare tax at 1.45% on all wages. Only $12,000 of the wages are still subject to federal unemployment tax at 0.6% and state unemployment tax at 2.7%. Record the employer's payroll taxes.
Recording payrollNorthgate Print Shop's gross wages for the period are $48,000. Withholdings are federal income tax of $6,240, Social Security tax at 6.2% and Medicare tax at 1.45%. No employee has reached any earnings limit. Record the payroll; wages will be paid later.

Questions

What payroll taxes does the employer pay?

The employer's share of Social Security and Medicare (together 7.65%), federal unemployment tax (FUTA) and state unemployment tax (SUTA).

Is the employer's FICA an expense?

Yes. The matching 7.65% is Payroll Tax Expense for the company; the employee's share is a withholding, not an expense.

Payroll entryHow to record payroll: Dr Wages Expense for gross pay, Cr the withholding liabilities (income tax, Social Security, Medicare) and Cr Cash for net pay.
Accrued wagesHow to record wages employees earned by period end but are paid later: Dr Wages Expense, Cr Wages Payable. With the payday entry and reversing entry.
Paying accounts payableHow to record paying a supplier: debit Accounts Payable, credit Cash. Covers partial payments, paying within a discount period and the expense mistake.
Notes payableHow to record a promissory note: Dr Cash, Cr Notes Payable when borrowing; Dr Interest Expense, Cr Interest Payable at period end; repayment at maturity.