If you’ve never ran payroll for an employee before, you might never have heard of this type of payroll tax because it’s paid by the employer only.

It’s an abbreviation for the Federal Insurance Contributions Act. This is a U.S. federal payroll tax that is deducted from every paycheck.

FICA is actually two different kinds of tax combined: Social Security tax and Medicare tax.

So you’re ready to hire help in your business, but not sure whether to hire a contractor or an employee. Let’s talk about the similarities and differences so you can decide which is the best option for your business.