Payroll Tax Requirements: What Every Small Business Should Know This Summer

Hiring during the summer? Whether you're bringing on interns, students, or part-time help, payroll taxes don’t take a vacation. As a business owner, it’s your responsibility to know what payroll taxes apply, when they’re due, and how to stay compliant; especially with seasonal employees. 

In this blog, we’ll explain what payroll taxes are, how they apply to summer hires, which forms and deadlines matter, and how to avoid costly payroll mistakes during your busiest months. 

What Are Payroll Taxes? 

Payroll taxes are the taxes you’re required to withhold from employee paychecks and pay as an employer. These taxes fund essential programs like Social Security, Medicare, and unemployment benefits. 

Here’s what typically makes up your payroll tax obligations: 

• FICA Taxes: Social Security (6.2%) and Medicare (1.45%) withheld from employees—and matched by the employer 
• Federal Income Tax: Withheld from the employee’s wages based on their Form W-4 (varies by state; some don’t require it) 
• FUTA: Federal Unemployment Tax paid by the employer (typically 6% on the first $7,000 per employee) 
• State Income Tax: Withheld from the employee’s wages based on their Form W-4 (varies by state; some don’t require it) 
• SUTA: State Unemployment Insurance, paid by the employer 

Do Seasonal Employees Trigger Payroll Tax Requirements?

Yes, in most cases. If you hire seasonal or summer employees and classify them as employees (not contractors), you’re on the hook for payroll tax obligations just like you would be for full-time staff. 

That means you must: 

• Withhold Federal and State income taxes 
• Pay the employer share of payroll taxes 
• File payroll tax forms like Form 941 (quarterly) and Form 940 (annually) 

Some Exceptions May Apply: 

• Student interns may be exempt under specific programs or schools
• Family employees under age 18 working for sole proprietorships or partnerships
• Independent contractors (if properly classified) 

But don’t assume your seasonal hire qualifies for an exception—check first or ask your accountant. 

Key Payroll Tax Forms & Deadlines for Summer

Hiring in the summer? Here are the forms you’ll likely need: 

Special Considerations for Summer Hiring 

Interns and Students 

• Still may be considered employees under the IRS guidelines 
• Often subject to FICA unless working under a qualifying school program 

Minor Employees (Teens) 

• You’re required to withhold and pay payroll taxes—even if they’re just 16
• Follow state child labor laws and tax rules 

Family Members 

• Children under 18 working for a sole prop or partnership owned by parents may be exempt from certain payroll taxes 
• But still report wages properly and issue W-2s 

Avoiding Payroll Errors During the Busy Season 

Summer is hectic. Here are common mistakes small businesses make with seasonal payroll—and how to avoid them: 

• Misclassifying workers as 1099 contractors to avoid payroll taxes
• Skipping state payroll registration when hiring in new states 
• Missing payroll tax deposit deadlines 
• Using outdated payroll software that doesn’t reflect current tax rates or thresholds 

Tip: If you’re hiring quickly, make sure your onboarding process includes W-4s, I-9s, and state forms to avoid compliance gaps.

Penalties for Payroll Tax Non-Compliance 

Getting payroll wrong isn’t just an inconvenience—it can be expensive: 

• Late deposits: Penalties up to 15% of the unpaid payroll tax 
• Failure to file forms: Penalties range from $50 to $280+ per missing form
• Misclassified employees: You could owe back taxes, penalties, and interest
• IRS or state audits: These can be triggered by missing reports or inconsistent filings 

Bottom Line 

Payroll taxes don’t disappear just because your hires are temporary. Whether you're onboarding summer interns or teenage part-timers, it's essential to understand your withholding and filing responsibilities. The cost of ignoring them can be steep. 

Need help staying compliant and on schedule this summer? LedgerFi offers stress-free payroll tax support for small businesses—seasonal or not. Contact us today to keep your business penalty-free and fully compliant.