Payroll Without Headaches
Gross-to-net, employer taxes, contractors vs. employees, and why payroll software is non-negotiable.
Run payroll through software, always
Payroll has too many tax surfaces (federal, state, local, unemployment) to do manually. Use Gusto, Rippling, or similar. They handle filings, W-2s, and 1099s.
The employer side
Beyond gross wages, you owe employer payroll taxes: 6.2% Social Security, 1.45% Medicare, FUTA, and state unemployment. Budget roughly 1.1x gross wages for total cost.
1099 contractors
Pay above $600/year to a US contractor and you must issue a 1099-NEC by January 31. Collect a W-9 before paying anyone, every time.
Key takeaways
- Never run payroll manually.
- True payroll cost ≈ 1.1x gross wages.
- Collect W-9s before paying contractors.