• FICA (Social Security) 6.2% up to a maximum of $6,621.60 (maximum subject wages remains at $106,800)
• FICA (Medicare) 1.45% on all wages.
• State Disability Insurance (SDI) 1.2% up to a maximum of $1,119.79 (maximum subject wages of $93,316)
• Self-Employment (SE) Tax 15.3% up to a maximum of $13,243.20 (maximum subject earnings from SE of $106,800); 2.9% on all earnings from SE thereafter.

It's not too late for your business to get some benefit from recent tax legislation. On March 18, 2010, the President signed the Hiring Incentives to Restore Employment (HIRE) Act. This jobs bill was intended to encourage employers to hire the unemployed. The HIRE Act created two new incentives for hiring and retaining unemployed workers:

1. The employer gets a holiday from paying the business's share of the OASDI (Social Security) tax on the new employee for the rest of 2010 (not much time left in the year for this benefit); and
2. The employer gets up to a $1,000 tax credit for keeping the new hire on the payroll for at least one year. This tax incentive means that if you hire a qualifying person before year-end, you can earn a $1,000 credit against future taxes if the employee works for you at least 52 weeks.

Some additional details about the incentives in the new hiring act include:

• The 6.2% payroll tax holiday helped pay a little toward the payroll costs of hiring a new employee.
• To encourage businesses to retain the new hires for at least 52 consecutive weeks, the HIRE Act also provides a credit up to the lesser of $1,000 or 6.2% of the first $16,129.03 of wages paid. This credit will be claimed on the 2011 return.
• There is no minimum weekly number of hours of work required of the new employee.
• There are no HIRE tax breaks if the business hires its family members or a spouse.
• The business can't simply replace another employee and qualify for the credit unless the replaced employee separated from employment voluntarily or for cause.
• The new qualified employee must sign a Form W-11 confirming that he or she was not employed for more than 40 hours in the 60-day period prior to beginning employment with your business.

A new payroll tax reduction is proposed for 2011. It would reduce the employee FICA tax withholding from 6.2% of the first $106,800 of wages by 2% to 4.2%. This change does not reduce employer withholding.

Use Form W-11 to confirm that an employee is a qualified employee under the HIRE Act.

Also new is the Small Business Health Insurance Tax Credit. It provides for a tax credit for up to 50% of an employers contribution towards health insurance premiums for their employees. 

Many businesses that do not collect sales tax (consultants, attorneys, insurance brokers, etc.) have been contacted by the State Board of Equalization (SBOE) to register for a Use Tax account in order to report and pay use tax. Any business with sales over $100,000 is a "qualified purchaser" and must register. Why are businesses being required to register? Many of us in California buy items from out-of-state retailers that are not required or authorized to collect California sales tax. If you make such a purchase and then use, give it away, store, or otherwise consume the item in California, you may owe California use tax. (Use tax is simply the sales tax that would have been collected at time of sale by the vendor). A typical example would be the purchase of a computer over the Internet from an out of state vendor that does not charge you sales tax. You then use the computer in your office or home. In this case, you are liable for the sales tax. Businesses will report and pay the use tax using form BOE-401-DS. For more information click Publication 79 on the SBOE's website. You can also file online at www.boe.ca.gov. 2010 use taxes are due 4/15/2011.