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If your business is growing in leaps and bounds, you may be poised to gobble up one of your competitors.

This will increase your overall payroll tax bill. Just be careful that you don’t overpay.  Claim credit for payroll taxes paid earlier this year. If the combined business operation keeps some of the same employees, the taxes paid by the competitor can reduce the amount your firm owes this year.  You can obtain a payroll tax “discount” for amounts paid by another employer.  When an employee works for two employers during the year, each employer must pay the 6.2% Social Security tax portion up to the annual wage base. All wages are subject to the 1.45% Medicare portion of the tax.  If one employer acquires another during the year—and it continues to employ some of the same people—the successor can count the wages paid by the predecessor toward its own Social Security tax wage base.  To qualify for this payroll break, the following conditions must be met:
• The successor employer obtains substantially all of the property used in the prior employer’s business.
• The employees worked for the predecessor immediately before the acquisition and for the successor immediately after the acquisition.
• All earnings were paid in the calendar year of the acquisition.[/vc_column_text][us_image image=”3806″][/vc_column][/vc_row]