What payroll taxes do Virginia employers need to pay?
Virginia employers pay federal payroll taxes plus Virginia unemployment insurance. Compared to other states, Virginia keeps things relatively straightforward. No state disability insurance or paid family leave programs to deal with.
On the federal side, you pay Social Security tax at 6.2% on wages up to the annual cap and Medicare tax at 1.45% on all wages. Those rates match what gets withheld from employee paychecks, so the combined FICA cost is 15.3% split evenly between you and your employees. Federal unemployment tax adds another 0.6% on the first $7,000 per employee, assuming you pay Virginia unemployment on time and qualify for the credit.
Virginia unemployment insurance is the main state-level employer tax. Rates range from around 0.1% to 6.2% depending on your experience rating. New employers typically start near 2.5%. The tax applies to the first $8,000 of wages per employee each year. Your rate adjusts annually based on how many former employees have filed unemployment claims against your account.
Budget roughly 8% to 10% of wages for employer payroll taxes when planning labor costs. The exact number depends on your unemployment rate and whether any employees earn above the Social Security wage base.
You also withhold federal and state income taxes from employee paychecks. That money belongs to your employees, not you. You’re just responsible for collecting it and getting it to the right agencies on time. Miss a deposit deadline and penalties add up fast.
Register with the Virginia Employment Commission when you bring on your first employee. They assign your unemployment rate and set up quarterly reporting. The VEC sends updated rate notices in late December each year. Watch for yours and update your payroll system before January paychecks go out.
Common mistakes include depositing payroll taxes late, running the old unemployment rate into the new year, and forgetting to update withholding when employees submit new W-4s. If you’re handling payroll yourself while running the business, these details slip through the cracks. Many small businesses in the Richmond area find that working with bookkeeping services in Richmond helps them stay on top of payroll compliance without it becoming another thing competing for their attention.
Greater Richmond's Small Business Bookkeeper
The Next Step:
A Short Conversation
Fifteen minutes to tell us what you're dealing with. We'll let you know how we can help and give you a clear price quote.
More Questions
Should I run payroll myself or use a payroll service?
You can run payroll yourself with software, but the time investment and compliance risk grow with each employee. Most small businesses benefit from outsourcing once they reach three to five employees or have complex pay structures.
Read answerHow do I set up job costing in QuickBooks Online?
Enable the Projects feature in QBO Plus or Advanced, then configure your chart of accounts to track costs by category. The software setup is straightforward but the structure you choose determines whether your job reports are actually useful.
Read answerWhat documents do I need to provide for catch-up bookkeeping?
Bank statements are the foundation. Credit card statements come next. Receipts, invoices, and payroll records help fill in the details, but you don't need perfect documentation to get started.
Read answerI haven't done any bookkeeping since I started my business. Is it too late?
No, it's not too late. Bank and credit card statements can be used to reconstruct your records even if you never tracked anything. The longer you wait, the harder it gets, but catching up is almost always possible.
Read answerHow do I handle sales tax when I sell both online and in-store?
In-store sales collect tax at your local Virginia rate. Online sales get more complicated because you charge based on where the customer lives, and you may owe tax in other states once you hit their sales thresholds.
Read answerHow long should I keep business receipts and invoices?
Seven years is the safe default for most business records. IRS requirements vary from three to seven years depending on the situation, and some documents like formation papers should be kept permanently.
Read answer
