IRS Tax Debt Help – 7 Things Business Owners Must Know About Payroll Costs

Tax Help: 7 Points Company Owners Need to Know About Payroll Taxes

The IRS assigns a significantly higher priority to the collection of payroll taxes mostly since at the end of the year, most staff can claim the taxes deducted on their W-2s as a credit and get a refund for their income. All the although, the employer may have never ever sent out the tax payments to the IRS which signifies the government is out of their cash on a double-whammy.

So what can you do as a small organization owner to avoid the wrath of the IRS? Here’s the top 7 that I went more than on the present:

  1. Price range at least ten% of an employee’s annual salary for payroll taxes. If you’re also paying wellness insurance costs to your staff, you require to budget about 22-23%.
  2. Use a skilled service to deal with the payroll. I strongly suggest this for a quantity of factors: (1) You won’t be tempted to dip into your payroll tax fund when you’re strapped for money (2) You as a business owner do not have the knowledge to deal with your very own taxes-possibilities are, you don’t know all the filing specifications, deadlines, and so forth. So employ a pro-it will be the very best investment you can make.
  3. Take a appear at your head count. It is possible that you can use independent contractors rather of personnel. Verify out the IRS’s web site for criteria for independent contractors versus employees and see if you pass that check. If you do, it would behoove you to use independent contractors rather of workers so you can save the taxes.
  4. Beware of the IRS “Cascading Penalties.” This implies if you are late on a tax payment and miss a $ten,000 deposit, you get slammed with a $1,000 failure to pay deposit penalty. Every single week after that when you submit your $10,000 payroll tax deposits, the IRS is often applying it to the quarter you missed. So for the next 7 occasions you submit your deposit, the IRS is assessing that $1,000 penalty for the following 7 weeks. All of the sudden you have a $7,000 penalty and all this time you thought you had been paying your payroll taxes on time. Make certain that when you miss a payment that you designate those federal tax deposits to the correct period.
  5. Beware of the corporate veil. The IRS is a very specific creditor when it comes to payroll taxes for corporations. They can pierce the corporate veil if the corporation does not spend payroll taxes. That means they can assess payroll tax against your individual social security range. So you can uncover your self suddenly personally owing the payroll taxes of the whole corporation. So don’t feel that due to the fact you have a “corp.” that you’re protected or shielded from the IRS-you are not.
  6. Get professional help if you owe a lot more than $20k or $25k in payroll taxes. A well-qualified tax expert can assist you hold your doors open, the lights on, and consumers paying their bills to YOU as an alternative of to the IRS. Considering that the IRS has the energy to circumvent your accounts receivable and and take the funds from your customers who owe cash to you, it is important that you do not let the IRS get this far.
  7. Take into account a effectively structured payment program. You may qualify for an Provide in Compromise or penalty abatement simply because the penalties are going to be huge with payroll tax deposits. [Note: after you’re late 16 days on a payroll tax deposit, the penalties are at 33%.]

Currently being a little business owner, I’m confident you enjoy what you do and have a passion for your perform. Do not let the IRS take that away from you due to the fact of payroll tax problems. The IRS will not hesitate to board your doors up and shut you down if you are non-compliant. Get expert tax aid now to resolve your IRS payroll tax issues so that you can focus on running your enterprise.

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About The Author

TK Bradley

tk bradley is a tax relief expert with many years of dealing with the irs and helping taxpayers to understand their rights and to settle their tax debt problems.