Arkansas employers are responsible for federal payroll taxes plus Arkansas unemployment insurance. The state doesn’t have disability insurance or paid family leave taxes, so your obligations are more straightforward than employers in states like California or New York.

The federal taxes you pay as an employer include Social Security at 6.2% of wages up to the annual wage base, Medicare at 1.45% of all wages with no cap, and Federal Unemployment Tax at 6% on the first $7,000 of each employee’s wages. That FUTA rate drops to 0.6% after you claim the credit for paying state unemployment, which you will if you’re current on your Arkansas filings.

Arkansas State Unemployment Insurance is the main state-level tax. Rates range from 0.3% to 14.0% depending on your experience rating. New employers typically start around 3.1% until they build a history. The taxable wage base is $7,000 per employee for most employers, though businesses with negative balance accounts pay on a higher base of $10,000.

Your experience rating changes over time based on unemployment claims filed by former employees. Fewer claims mean a lower rate. More claims push your rate higher. This gives you some control over your long-term unemployment tax costs through stable employment practices.

Adding up the employer portion of Social Security, Medicare, and unemployment, you’re looking at roughly 8% to 10% on top of gross wages for most small businesses. That’s money you need to budget for when calculating what an employee actually costs you.

Beyond the taxes you pay yourself, you’re also responsible for withholding employee taxes from their paychecks: the employee half of Social Security and Medicare, federal income tax, and Arkansas state income tax. These aren’t your expense since the money comes from employee wages, but you’re on the hook for collecting and remitting them correctly. If you withhold but don’t remit, that’s where serious problems start.

Filing schedules vary based on your liability. Most small employers deposit federal taxes monthly and file Form 941 quarterly. Arkansas unemployment reports are due quarterly as well. A bookkeeper near Bentonville can help you stay on top of these deadlines if you’re not using a payroll service.

Payroll management handles all of this automatically. The calculations, deposits, and filings happen without you tracking deadlines or worrying about rate changes. For most business owners, that peace of mind is worth more than the cost.