If you’re a new employer and aren’t familiar with all of the terms and taxes applicable to payroll, worry not, and definitely don’t panic.
Imposed on employers by state and federal governments and used to finance social insurance programs, employers pay payroll tax on behalf of their employees, and eventually collect the amount by making deductions from the salaries or wages of their employees.
It’s important to recognize however, that if you outsource your payroll requirements to a third party, there’s absolutely no need for you to know any more than the basics about payroll taxes. You can simply sit back and relax, safe in the knowledge that your employees will be paid properly and you’ll be paying all necessary payroll taxes to the IRS, on time and in full. IRS penalties for failing to pay the appropriate taxes on time and in full, are no joke, and it’s worth investing in the services of a tax professional if only to keep you on the right side of the IRS.
Even if you plan to outsource your tax requirements, it can be helpful to have a basic understanding of payroll taxes as an employer, and here are 7 things you should probably know:
- As a small business owner, you are the most likely to find yourself the target of increased tax compliance enforcement
- When it comes to your payroll taxes, there is no higher authority to answer to than the IRS, who have been known to carry out some highly aggressive tactics for collecting what they’re owed. In some instances, failure to address past due payroll taxes, could result in you losing your business
- Business owners can get themselves into significant debt due to payroll tax penalties, and dramatically increase your total tax bill
- Failure to file or pay your payroll taxes is a federal crime
- It’s illegal to borrow from payroll taxes, making it against the law for small and medium sized businesses to use any money collected from payroll taxes to pay their operating expenses
- If payroll taxes are owed, the IRS have the power to pursue individual business owners, in ways that other creditors simply cannot.
- If you owe payroll taxes and are audited, you should seek help from a tax professional immediately. It isn’t worth representing yourself before the IRS, instead, hire a CPA and let them handle the matter on your behalf.
While failing to pay your payroll taxes is a serious matter, it won’t be a matter for you to concern yourself with if you hire an accounting service to help you. Handling everything related to your company’s taxes, they’ll ensure that the IRS never become a problem. Ultimately, this could save you not just stress and worry, but money, and if you need help with your payroll taxes as an employer, schedule a consultation with an accounting firm at the earliest.