WHY IS CASH FLOW MORE IMPORTANT THAN PROFIT
Cash Flow More Important is the Income Statement or Balance Sheet, Profit indicates business success, cash flow measures day-to-day basis staying power
Payroll taxes
Payroll taxes is taxes imposed on employers or employees. The employee pays 7.65% and the employer matches that amount. It comprised of FICA and Medicare.
Payroll taxes generally fall into two categories: deductions from an employee’s wages, and taxes paid by the employer based on the employee’s wages.
The first kind are taxes that employers are required to withhold from employees’ wages, also known as withholding tax, pay-as-you-earn tax (PAYE), or pay-as-you-go tax (PAYG) and often covering advance payment of income tax, social security contributions, and various insurances (e.g., unemployment and disability). The second kind is a tax that is paid from the employer’s own funds and that is directly related to employing a worker. These can consist of fixed charges or be proportionally linked to an employee’s pay. The charges paid by the employer usually cover the employer’s funding of the social security system, Medicare, and other insurance programs.
It is sometimes claimed that the economic burden of the Payroll taxes falls almost entirely on the worker, regardless of whether the tax is remitted by the employer or the employee, as the employers’ share of Payroll taxes is passed on to employees in the form of lower wages that would otherwise be paid. Because Payroll taxes fall exclusively on wages and not on returns to financial or physical investments, Payroll taxes may contribute to underinvestment in human capital such as higher education.
In the United States, Payroll taxes are assessed by the federal government, some of the fifty states (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not have state income tax; New Hampshire and Tennessee only tax income from interest and dividends), Washington, D.C., and numerous cities. These taxes are imposed on employers and employees and on various compensation bases and are collected and paid to the taxing jurisdiction by the employers. Most jurisdictions imposing Payroll taxes require reporting quarterly and annually in most cases, and electronic reporting is generally required for all but small employers. The Federal Insurance Contributions Act tax is a federal Payroll taxes imposed on both employees and employers to fund Social Security and Medicare —federal programs that provide benefits for retirees, the disabled, and children of deceased workers.
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