Payroll Taxes 940/941
If you’re a business owner, payroll taxes are an essential part of your business. As a business owner, you want to make sure your employees stay happy. How do employees remain happy at work? There are a variety of ways to keep employees happy at work, and one is to pay them on time. However, there are vital components to consider when figuring out how much your employees should receive in their paychecks. You want to correctly determine how much money you should withhold for items such as federal income tax, benefits, and payroll taxes. It’s essential to understand what each of those withholdings is and how they affect your business. More importantly, understanding payroll taxes and the consequences of not paying them will help you manage your business better.
What are payroll taxes?
There are two main parts of payroll taxes. Payroll taxes compromise a portion of an employee’s paycheck that’s withheld by the employer. Additionally, payroll taxes include contributions that the employer must make. Payroll taxes are used to pay for several government programs, including Social Security and Medicare. Also included in payroll taxes are income taxes. In addition to withholding taxes from an employee’s paycheck, employers need to match contributions to Social Security and Medicare. Additionally, employers must issue other tax payments, such as state and federal unemployment taxes.
How do you pay payroll taxes?
The frequency at which a business owner makes payroll tax payments depends on the size of their business. Additionally, payroll tax payments often depend on how often they run payroll and the type of employer they are. Companies can undoubtedly pay payroll taxes on their own, but it can be complicated. Keeping track of making payments and withholding the right amount of money can be difficult and time-consuming.
Steps for managing payroll taxes
It’s essential to properly manage payroll taxes to ensure your business is compliant with the IRS. There are several ways to manage the payment of payroll taxes.
– Pay the payroll taxes yourself: A business owner can complete payroll taxes for each employee. The process involves analyzing employees’ tax forms, calculating allowances, and doing basic math to withhold the right amount of money.
– Utilize a payroll services company: A third-party payroll processing company can manage employee payroll for you. The benefit of payroll services is they process payment and make sure your company remains tax compliant.
– Work with a tax professional: Companies can also work with a tax professional to solve payroll problems. Additionally, an accountant can also help with completing payroll taxes.
Investing in a tax specialist to handle payroll taxes for you will save you time. As a business owner, you should focus on growing your business and managing critical projects.
What happens if a business doesn’t pay payroll taxes?
Small businesses should not take prompt payment of payroll taxes lightly. If companies don’t make their payroll tax payments on time, they could face huge fines. Business owners run the risk of having their businesses shut down. What’s worse, business owners could face time in jail for failing to pay payroll taxes. Any money a business withholds from employees’ checks for payroll taxes belongs to the government. If companies don’t pay the correct payroll taxes, the IRS will come knocking. The IRS can become even more aggressive when attempting to settle unpaid payroll tax. Since funds from payroll taxes are used to fund government initiatives, the IRS makes sure they get their money. For that reason, IRS officials will be up-to-date on whether you’re paying your share of payroll taxes.
Why are payroll taxes significant?
Paying payroll taxes is an integral part of your business. It may be easy to focus on the day-to-day operations of the company. Business owners are so bogged down with other tasks they often forget about payroll taxes. However, payroll taxes are something all businesses must contribute. Consider partnering with a payroll service or working with a tax professional to protect your business from the IRS.
Payroll Tax Debt Relief
For businesses who currently owe employee withholding tax to the IRS, it’s essential you settle these taxes immediately. As mentioned above, the IRS is the most aggressive when it comes to dealing with these types of fees. If a business fails to pay payroll taxes, they are putting their income, assets, and reputation at risk. To resolve the payroll tax debt, employers can apply for tax relief programs such as an Installment Agreement. Businesses may qualify for a reduction or forgiveness of penalties, depending on the reason for not paying. It’s helpful to consult a tax relief expert to determine for which payment plan you should apply. Choosing the right tax resolution plan is an essential step for successful tax debt resolution.
Consequences of not paying payroll taxes
A business can be forced to close for not paying payroll taxes. The IRS can legally seize all assets of the company to satisfy the debt. Even if the business closes, the payroll taxes still must be settled. The IRS will not stop even after they’ve forcefully closed your business. If you don’t make arrangements to pay, your finances could be at risk. Should the IRS determine your failure to pay your payroll taxes is tax evasion, you could face criminal penalties. For businesses, tax evasion penalties include a maximum fine of $500,000 and up to five years in prison. Even after jail time, a business owner will still be responsible for paying the penalty of the unpaid tax.
What is the statute of limitations on payroll tax?
The IRS has ten years to collect on unpaid payroll taxes. However, since the IRS acts quickly on delinquent payroll taxes, a lot can happen in just ten years.
How to avoid payroll tax debt
Employers can prevent tax payroll debt by deducting payroll taxes from each employee’s paycheck and paying the government. Business owners must pay these taxes within three years of the pay date.
Get help with payroll tax debt from Platinum Tax Defenders
The expert team at Platinum Tax Defenders has been working with individuals and businesses alike to resolve their tax debt. Platinum Tax Defenders is made up of CPAs, enrolled agents, and tax attorneys who have years of experience getting corporations out of debt. When it comes to payroll taxes, the IRS is extra diligent in getting its money. Don’t run the risk of ruining your business and your reputation. Get help from the professionals at Platinum Tax Defenders by calling today for a free consultation.
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Platinum Tax Defenders is a full-service tax resolution firm in Los Angeles that has been helping taxpayers resolve their IRS and State tax issues since 2011. Our team of tax attorneys, accountants, and enrolled agents have a combined more than 90 years of experience in the financial services industry. Our team is ready to provide tax relief services to clients facing wage garnishments, bank levies, liens, and other challenges.
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Platinum Tax Defenders is a full-service tax resolution firm that includes a tax attorney, IRS enrolled agents, and certified public accountants specializing in providing tax relief services for taxpayers facing IRS or State tax debt. We work with the IRS on your behalf to come up with reasonable payment options and settlements. Our tax professionals are knowledgeable and experts in tax negotiations. The consequences for unpaid taxes vary by each individual taxpayer’s situation. But unpaid tax debt can lead to wage garnishment, property liens, and bank account levies. Platinum Tax Defenders will help you reach a tax resolution plan before it’s too late.
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At Platinum Tax Defenders, we’ve developed an impeccable reputation for doing what’s best for our clients, 100 percent of the time. We are honest and upfront with you about your tax debt situation, and the type of tax resolution services we can provide. Each individual tax situation is different, and we’ll do whatever we can to negotiate with the IRS to help you reach a tax relief plan that works for you. We are experts in our field and work diligently to resolve the specific tax issues that each of our clients face. Platinum Tax Defenders offers fair and honest tax resolution services, and you can count on us to operate professionally and legally.