Business Finances is about 15% of the CSLB Law and Business exam. The CSLB study guide lists four subtopics: cash management, budget and planning, taxes, and financial reporting. This note covers the part with clear written rules: payroll taxes. It explains who pays each tax, when to deposit it, what to report, and how long to keep records.
Tax rates and wage limits change every year. The numbers below are for 2026. Always check the current year's guide.
Federal payroll tax deposits
IRS Publication 15 (2026) is the federal employer's tax guide.
- Two deposit schedules. Social security, Medicare, and withheld federal income taxes are deposited on either a monthly or a semiweekly schedule. You must choose the correct schedule before each calendar year begins. (IRS Pub. 15)
- What decides the schedule. The schedule depends on the total tax you reported during a "lookback period". It does not depend on how often you pay your employees or how often you make deposits. (IRS Pub. 15)
- Lookback period. For Form 941 filers, the lookback period is four quarters, from July 1 to June 30. If you reported $50,000 or less in that period, you are a monthly depositor. If you reported more than $50,000, you are a semiweekly depositor. (IRS Pub. 15)
- Monthly schedule. Deposit the taxes for payments made during a month by the 15th day of the following month. (IRS Pub. 15)
- Semiweekly schedule. If payday is Wednesday, Thursday, or Friday, deposit by the following Wednesday. If payday is Saturday, Sunday, Monday, or Tuesday, deposit by the following Friday. (IRS Pub. 15)
- New employers. A new Form 941 filer is a monthly depositor for its first calendar year, because its tax for the lookback period counts as zero. (IRS Pub. 15)
- $100,000 next-day rule. If you build up $100,000 or more in taxes on any day during a deposit period, you must deposit by the next business day, whatever your schedule. (IRS Pub. 15)
- Electronic deposits. You must use electronic funds transfer (EFT) for all federal tax deposits, for example through EFTPS. (IRS Pub. 15)
- Different rules for FUTA. These deposit schedules do not apply to federal unemployment (FUTA) tax. (IRS Pub. 15)
- Records. Keep all records of employment taxes for at least 4 years. (IRS Pub. 15)
California payroll taxes
The EDD California Employer's Guide (DE 44), 2026 explains the four California payroll taxes.
| Tax | Who pays | 2026 wages taxed | 2026 rate |
|---|---|---|---|
| Unemployment Insurance (UI) | Employer | First $7,000 per employee per year | New employers: 3.4% for two to three years |
| Employment Training Tax (ETT) | Employer | First $7,000 per employee per year | 0.1% (at most $7 per employee per year) |
| State Disability Insurance (SDI) | Employee (employer withholds it) | No limit | 1.3% |
| Personal Income Tax (PIT) | Employee (employer withholds it) | No limit | Based on the employee's DE 4 form |
Source for the table: EDD DE 44 (2026).
- UI rates change. After the new-employer period, an employer's UI rate can go up to 6.2% or down to 1.5%, based on its experience rating and the UI Fund balance. (EDD DE 44)
- SDI has no wage limit. Since January 1, 2024, there is no taxable wage limit for SDI. (EDD DE 44)
- Register with EDD. A commercial employer files the registration form (DE 1) within 15 calendar days after paying more than $100 in wages in a calendar quarter. (EDD DE 44)
- File electronically. All employers must file tax returns and wage reports and make payroll tax deposits to EDD electronically. (EDD DE 44)
- Quarterly reports. Employers report wages and withholding each quarter on the DE 9 and DE 9C. For example, the report for January to March 2026 is due April 1, 2026, and is late if not filed by April 30, 2026. (EDD DE 44)
- Records. Keep payroll records for at least four years. If you think you are not a subject employer, or that your workers are exempt, keep records of payments to service providers for at least eight years. (EDD DE 44)
Cash management, budgets, and financial reports
The study guide also lists cash management, budget and planning, and financial reporting. These are general business-management skills. The free public sources this note relies on do not set specific rules for them, so this note does not summarize them.