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Retail Businesses: Payroll Tax Guide (2026)
Payroll tax for a retail business is the federal stack every employer runs, withholding, 7.65 percent employer FICA, FUTA, deposits and Form 941, plus the retail business items this page cites: IRS Publication 15 (2026), section 12, IRS Publication 15 (2026), section 6 and IRS Publication 15 (2026), section 7. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Tax rules specific to retail businesses
A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter.
Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA.
Commissions, bonuses, and overtime pay are supplemental wages. When paid separately from regular wages to an employee who had income tax withheld in the current or preceding year, the employer may withhold a flat 22 percent, with no other percentage allowed under that method.
The stack every retail business runs
On one of the retail salespersons at the May 2025 national median of $35,410, the employer share of Social Security and Medicare is $2,709 a year, FUTA is $42 after the 5.4 percent state credit on the first $7,000, and income tax withholding follows the employee's W-4. Deposits are monthly or semiweekly depending on the prior lookback period, with a next-business-day deposit whenever $100,000 accumulates. Form 941 is due the last day of the month after each quarter; W-2s and any 1099-NEC at the $2,000 threshold are due January 31.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter. [IRS Publication 15 (2026), section 12]
- Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA. [IRS Publication 15 (2026), section 6]
- Commissions, bonuses, and overtime pay are supplemental wages. When paid separately from regular wages to an employee who had income tax withheld in the current or preceding year, the employer may withhold a flat 22 percent, with no other percentage allowed under that method. [IRS Publication 15 (2026), section 7]
Read the full guide to how to calculate payroll taxes, and the rest of the retail business payroll library.
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Frequently Asked Questions
Retail business payroll tax: IRS Publication 15 (2026), section 12
A seasonal employer that pays no wages in some quarters does not have to file Form 941 for those quarters, but it must check the Seasonal employer box on Form 941, line 18, on every Form 941 it files. Otherwise the IRS expects a return for each quarter.
Retail business payroll tax: IRS Publication 15 (2026), section 6
Employees must report cash tips to the employer by the 10th of the month after the month the tips are received, and no report is required for a month in which tips are less than $20. Tips of $20 or more in a month are subject to social security and Medicare tax, and reported tips of $20 or more are also subject to FUTA.
What is the employer tax cost on one of the retail salespersons?
At the $35,410 national median (BLS OEWS, May 2025): $2,709 in employer Social Security and Medicare, $42 in FUTA after the state credit, plus state unemployment at the employer's assigned rate.
What does managed payroll cost for a retail business?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. High turnover and new-hire volume, multi-location payroll and seasonal overtime spikes are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Retail Businesses. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: IRS: Understanding Employment Taxes
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