Have you run into any payroll tax problems? You’re not alone. Even the most well-oiled company can make a mistake and end up in trouble with their taxes, but it doesn’t have be that way!
Here at The Payroll Company, we strive to help businesses avoid these mistakes by providing all sorts of valuable information about how they work (and what happens if I do X). We scour every corner of the internet looking for news stories related specifically towards business owners like yourself who may need advice concerning tax liability or other important topics such as employee benefits packages. In our research, we’ve come across the top challenges that business owners face today.
Payroll problems are the bane of small businesses everywhere. They can strike at any moment, and when they do you need to be prepared for anything from difficulties collecting debts owed by employees in your company (due either unpaid wages or taxes withheld), through to audits from both federal and state agencies like IRS who want their share too!
Here we look into some common tax-related payroll issues that may arise:
Failure to Withhold and Pay Federal Taxes
US Employers are required to withhold federal income tax, and if they don’t then it can often lead them on a collision course with big trouble.
If you fail pay these taxes after withholding them from an employee’s wages or salary – which is commonplace – you will likely be held liable and incur hefty fines and penalties from the government (IRS). Remember, failing to do so could also put your job at risk!
Late Payroll Tax Deposits and Payments
The IRS will charge you fines and penalties if your payroll tax deposits are late. In most cases, they assess a 0.5% penalty for each month that the payment is excessively overdue, as well as 25% of all taxes due when it isn’t paid at all before April 15th.
Be certain you pay on time so there are no possible hassles from Uncle Sam later.
Failure to Issue IRS Form 1099
The IRS is strict about 1099s and will act if you don’t issue them. It’s important for employers who use outside companies or subcontractors to be aware that $600 worth of income qualifies as wages. This means they need to send in a Form 1099 with payments reported on it, along with any taxes withheld during the year so far. If an employer neglects this duty, he could face steep fines of up to 31% of tax paid.
Don’t wait until payroll issues become bigger problems. The more rapidly you take action, the faster we can clear up any confusion and get you back on track!