FICA
In accounting, FICA means social Security tax — 6.2% of wages up to the year's wage base — and Medicare tax — 1.45% of all wages — each paid twice: withheld from the employee and matched by the employer. 7.65% a side below the wage base.
Also called Federal Insurance Contributions Act tax.
Authority: IRS Pub. 15 (2026), What's New (opens in a new tab). Sources
The lessons that teach this
From the free founder back-office course, taught on one company's books, with exercises to work it yourself.
- How each entity is taxed › Self-employment taxBoth halves of Social Security and Medicare, 15.3% on 92.35% of net profit, worked on one Northwind founder's share.4 min
- The S corporation election › Reasonable compensationThe factors that set an S corporation owner's salary, and the payroll and distribution entries that follow.4 min
- Gross to net pay$8,400 earned, $6,707.40 paid: federal income tax from each W-4, Social Security and Medicare on their own bases, and net pay as the remainder.12 min
- The employer's payroll taxes$642.60 of FICA match and $50.40 of FUTA on September's wages, plus the state's unemployment tax: what Northwind owes on top of gross pay.10 min
For founders
The same idea written for a founder: what it costs a startup that ignores it, and what to do in a real month.
- Payroll journal entries, from gross to netGross wages, employer taxes, withholding and net pay as journal entries: what each payroll run books, how to accrue it at month end, and where benefits go.
- Contractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- Balance sheet explained for startupsAssets equal liabilities plus equity. What each startup line means, from deferred revenue to the SAFE and the accumulated deficit, and why it must balance.
What it is not called
Each of these means something else. Use one here and an accountant reading the product notices.
- payroll tax for every employment tax
- FUTA (employer-only)
Also in Payroll
Defined in Lexicon. This page is generated from that document, so the two can't disagree.