Monday, March 9, 2009

Payroll Taxes

One of the most frequent mistakes I see small businesses make is with their payroll taxes. They either do not now the rules about depositing them or they turn the responsibility over to someone else and assume it is being done correctly.

Daily, I see cases where a client trusted a bookkeeper or accountant to make their payroll tax deposits and then find out they were not being made. You as the small business owner are responsible for being sure these tax deposits are being made and will be held responsible by the IRS if they are not. You are the one who will be penalized. Anyone who has signature authority on the business checking account can be held liable.

If you do not know how frequently your deposits need to be made or your 941s need to be filed, the IRS website can guide you. Many small businesses make theirs on the 15th of the month for the previous months payroll taxes.

Remember you are taking part of this tax out of your employees paycheck and holding this money in trust for the IRS. Choosing to pay another business expense rather than your payroll taxes can cost you not only penalties and interest, but your business itself. The IRS can close your business down and seize it's assets if you do not pay your payroll taxes.

If you are behind in paying your payroll taxes, call the IRS or an Enrolled Agent to represent you before the IRS and set up a payment plan. The longer you wait, the more it will cost you. The liability can even be assessed to you personally, ruin your credit and put a lien on your home.

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