Business License Guide

Guide for LLC owners

LLC Payroll Tax Guide - FICA, FUTA, Form 941, Form 940, W-2, and State Payroll Taxes (2026)

LLC payroll taxes guide covering FICA, FUTA, federal income tax withholding, Form 941 quarterly due dates, Form 940, W-2/W-3, S-corp owner payroll, state payroll taxes, and payroll software CTAs for Gusto, ADP, and OnPay.

Last verified: 2026-05-08 Official sources linked below

Time to complete

Payroll is active when worker classification, state registrations, deposit schedule, and first payroll run are complete.

Steps

6

Timing note

State payroll registration often controls the launch timeline; start before the first employee work date.

Before you start

What to know first

  • An LLC owes payroll taxes when it has W-2 employees. Owner draws from a default single-member LLC are not payroll, but wages to non-owner employees are.
  • FICA has two regular halves: the employee share is 6.2% Social Security plus 1.45% Medicare, and the employer match is another 6.2% Social Security plus 1.45% Medicare. The employee share is withheld from wages; the employer share is a business cost.
  • Federal income tax withholding is based on Form W-4, pay frequency, taxable wages, and IRS withholding tables. It is separate from FICA and is deposited with payroll taxes.
  • FUTA is employer-only. The standard rate is 6% on the first $7,000 of wages per employee; with the maximum state unemployment credit, the common effective federal rate is 0.6%.
  • State payroll taxes are separate from federal payroll taxes. Most states require withholding and unemployment insurance accounts; some add disability, paid family leave, local payroll, or workers compensation reporting. See the state payroll taxes hub for state-by-state registration links.
  • Form 941 is filed quarterly for most employers. The common due dates are April 30, July 31, October 31, and January 31, shifted to the next business day when a deadline falls on a weekend or federal holiday.
  • Form 940 reports annual FUTA. Forms W-2 are furnished to employees by January 31, and Form W-3 transmits W-2 totals to the Social Security Administration by the same deadline.
  • An LLC with an S-corp election must run payroll for active owner-members who provide services. The owner salary must be reasonable before profit distributions are taken.

Documents

What you'll need

  • EIN and federal payroll account access
  • State withholding and state unemployment insurance account numbers
  • Employee Form W-4 and state withholding forms
  • Form I-9 employment eligibility records
  • Payroll register and deposit confirmations
  • Forms 941, 940, W-2, and W-3
  • S-corp reasonable compensation memo for active owner-members

Process

Step by step

  1. Confirm who must be on payroll Put W-2 employees and S-corp owner-employees on payroll. Do not treat default LLC owner draws or partner guaranteed payments as W-2 wages without tax advice.
  2. Register federal and state accounts Use the LLC EIN for federal payroll deposits. Register with state withholding and unemployment agencies before the first payroll, then confirm any local payroll or disability programs.
  3. Run payroll and calculate withholding Withhold employee FICA and federal income tax, add employer FICA and FUTA/SUTA, then pay net wages. Payroll software such as Gusto, ADP, or OnPay reduces arithmetic and filing risk.
  4. Deposit payroll taxes on schedule Follow the IRS monthly or semiweekly deposit schedule based on the lookback period, and keep state deposit schedules separately. Late deposits are one of the most expensive payroll mistakes.
  5. File quarterly and annual payroll forms File Form 941 by April 30, July 31, October 31, and January 31. File Form 940 annually, furnish W-2s by January 31, and transmit W-3 with W-2 totals.
  6. Reconcile before year-end Tie payroll registers to Forms 941, state returns, W-2 wages, W-3 totals, and S-corp owner compensation support before the last payroll of the year.

Costs

What it costs

Item Amount Notes
Employer FICA 7.65% of covered wages 6.2% Social Security plus 1.45% Medicare employer share, before wage-base and Additional Medicare details.
Employee FICA withholding 7.65% of covered wages Withheld from employee wages: 6.2% Social Security plus 1.45% Medicare. Additional Medicare Tax is employee-only above the withholding threshold.
FUTA 6% on first $7,000; often 0.6% after state credit Employer-only federal unemployment tax. Credit-reduction states can increase the effective cost.
Payroll software $40-$100/month plus per-employee fees Gusto, ADP, and OnPay can calculate payroll, make deposits, file Forms 941/940, issue W-2s, and handle many state filings.

FAQ

Common questions

What payroll taxes does an LLC pay?

An LLC with W-2 employees withholds employee FICA and federal income tax, pays the employer FICA match, pays FUTA, and handles state withholding and unemployment taxes where required.

What are the Form 941 quarterly due dates?

For calendar quarters, Form 941 is generally due April 30, July 31, October 31, and January 31, adjusted to the next business day when a deadline falls on a weekend or federal holiday.

Do S-corp LLC owners need payroll?

Yes. Active owner-members of an LLC taxed as an S corporation generally need reasonable W-2 compensation before taking distributions.

What is the effective FUTA rate?

The standard FUTA rate is 6% on the first $7,000 of wages per employee. The maximum state unemployment credit is generally 5.4%, producing a common net federal rate of 0.6%.

Can payroll software handle LLC payroll taxes?

Yes. Gusto, ADP, and OnPay can run payroll, calculate withholding, submit deposits, file payroll returns, and produce W-2/W-3 forms, although state registrations and classification decisions still remain the employer's responsibility.

Provenance

Legal basis & official sources

Last verified 2026-05-08.

IRC Sections 3101 and 3111 govern employee and employer FICA. IRC Section 3301 governs FUTA. IRS Publication 15 explains employer withholding, deposit schedules, Forms 941/940, and W-2/W-3 timing. State withholding and unemployment statutes add separate payroll tax requirements.

Direct filing portal: https://www.irs.gov/forms-pubs/about-form-941

If you skip this

  • Missed deposits can trigger IRS failure-to-deposit penalties and interest.
  • Late Forms 941, 940, W-2, or W-3 can create separate filing penalties.
  • Misclassifying employees as contractors can produce back FICA, state UI assessments, interest, and labor audits.
  • S-corp owner-members who skip payroll risk wage reclassification, back payroll taxes, and penalties.

Official sources

§ A Related guides

§ B Building permits

§ C Companion tools

Disclaimer: Informational only, not legal or tax advice. Rules change, so confirm with a business attorney or CPA before you act.