Embedded Payroll & Company Tax Requirements
Depending on where a company’s employees work and live, businesses are subject to a wide variety of taxes – those levied by the federal government and state governments and in many states taxes levied by local municipalities. Some taxes may have company specific rates that must be reported by a company representative in order for Gusto to calculate payroll correctly. Every tax must be reported and paid to specific tax agencies – these tax agencies may require businesses to register and receive an account number specific to the agency. Some agencies may require different businesses to make payments at different frequencies (a.k.a. “deposit schedule”). So, in order to calculate, pay, and file a business’ payroll taxes correctly, a very dynamic set of account numbers, deposit schedules, registration details, and other answers must be collected from a business representative.
There are More Than 10,000 Possible Tax Questions
There are more than 10,000 possible questions that could be asked of a company, but only a small percentage of them are relevant for a given customer. The Gusto Embedded Payroll Company Tax Requirements API is designed to tell you the exact requirements for each company’s unique situation. After adding company work locations, adding employee’s home addresses, and assigning employees to those work locations, the Tax Requirements API will return the exact requirements needed to calculate, pay, and file the business’ payroll taxes. Each requirement includes a customer facing label and description to describe the requirement as well as metadata that can be used to programmatically collect the right type of data.
Gusto stays abreast of tax changes nationwide and ensures that tax requirements are always up-to-date for all of your customers. Given the structure of the API, once implemented, your application will be able to collect present and future requirements without needing to build new application logic.
Let’s Walk Through an Example
Let’s walk through an example for a hypothetical business in Ohio. The business has 3 work locations in the state, located in the cities of Columbus, Blue Ash, and Cleveland. What information must be collected? We’ll use screenshots from our embeddable flows UI to demonstrate the requirements and how they change as more locations are added.
Step 1: Add the company’s first employee in Columbus: 1390 W. 5th Ave. Columbus. OH 43212
- This is the company’s first employee in Ohio, so it has triggered some statewide requirements as well as a local municipality requirement.
- Withholding Account Number (Ohio)
- Employer Account Number (Ohio)
- Columbus Tax Number
- Contribution Rate (Ohio)
- Withholding Filing Frequency (Ohio)
Step 2: Now, add a second employee in Blue Ash: 4343 Cooper Road, Blue Ash, Ohio 45242
- New requirements
- City of Blue Ash Account Number
- City of Blue Ash Deposit Schedule
- New requirements
Step 3: Now, add the company’s third employee in Cleveland: 601 Lakeside Ave, Cleveland, Ohio 44114
- New requirements:
- Registered with CCA – Division of Taxation
- New requirements:
You’ll also notice that some requirements are effective dated, for example “Tax Rates”. It is expected that the values of these requirements can change over time. For example, a state unemployment tax agency may re-assess a company and assign them a new tax rate based on prior behavior. Gusto can store multiple values with associated effective from dates and use the correct value for payroll calculations, payments, and filings. All effective dates must be on calendar quarter boundaries. For any effective dated requirements, an application should allow customers to submit new effective dated values.
The flow UI is powered directly by the Embedded Payroll Company Tax Requirements API. For a detailed API specification, see our documentation below:
Additional Embedded Payroll API Resources
- Index – Get a list of a company’s tax requirement states
- Show – Get a company’s tax requirements for a state
- Update – Update a company’s tax requirements for a state
Have any questions?
Have a feature request or feedback? We’re happy to help! Simply submit your feedback or question and a member of the Gusto Embedded Payroll team will get back to you as quickly as possible!