You must know by now that you most likely have pytrol taxes when you start running a business. It doesn’t come as a surprise that the internal revenue service has strengthened its payroll tax compliance program with its focus on small and growing businesses. Therefore, it is detrimental to be carefree or take this obligation with levity.
The questions arise about what taxes you should pay, which has made most business owners lag. As a business owner, you must account for social security, federal income tax, Medicare, and federal & state unemployment tax.
The importance and benefits of efficiently fulfilling these obligations can not be overemphasized.
The topmost traps of employer payroll taxes are delayed deposits, erroneously classifying employees as independent contractors, using monies withheld from employees’ salaries to make up for cash flow, and incorrectly paying unemployment taxes.
It is essential to know all that has been listed above and understand that the dangers can be more severe.
Consequences of Faulting Payroll Taxes
Here are some effects of faulting payroll taxes:
The penalties can sum up instantly and lead to enormous tax liabilities.
You must know that penalties incurred on delinquent payroll tax deposits or filings can drastically lead to an increase in a booming or growing business payroll tax bill. Regardless of the type of business, be it a sole proprietorship, LLC, corporation, or S-corporation, the tax penalties discovered can lead to the loss of the business entirely. It’s important to note the three essential crimes that can trigger the penalties- refusal to file, refusal to deposit, and refusal to pay.
It can lead to the demise of your business.
As mentioned earlier, you must always consider that you are holding on to taxes from your employees as an employer. You have been entrusted with paying those taxes on the IRS for your employees. Therefore your integrity is put at stake, and the trust people have in you must not be broken. Failure to fulfill your part of the obligation can make the IRS shut down your business. They can go further to lay hold on your inventory, equipment, funds, bank accounts, and machinery.
Thus, all notices should not be ignored; you should respond immediately If you don’t want to lose your business.
More Penalties
Aside from the penalties listed above, the IRS usually has access to the Trust Fund Recovery Penalty (TFRP), which generally holds people accountable for all unpaid trust fund taxes. People are liable for TFRP if the individual is obligated to collect, give account, and pay the trust fund taxes to the government. Suppose the individual refuses to collect or pay the trust fund taxes to the government.
It’s considered a crime.
If you are unaware, be informed that not filing or paying is regarded as a federal crime.
When the IRS cannot satisfy a young business payroll debts through its usual methods, it is confined with the power to transfer the business owner's case file to the criminal division for further investigation and subsequently to the Justice departments if there is evidence that you don’t want to file or pay the payroll taxes.
As a business owner, to avoid all these pitfalls, you must do the needful ahead and avoid delays as much as possible.
Sometimes, if you can't handle the situation and are already neck-deep in trouble, you can search for a payroll company that knows the essential guidelines and regulations to provide the help you need.
The dangers of delay should never be ruled out; always remember that success is to see your business thrive and blossom. Practical and realistic steps should be taken to prevent the loss of your business. As a result, you must be guarded.
FOR MORE INFORMATION ON HOW JIM McCLAFLIN, EA, NTPI FELLOW, CTRC CAN BEST HELP YOU WITH YOUR TAX FILING NEEDS, PLEASE CLICK THE BLUE TAB ON THIS PAGE.
THANKS FOR VISITING.
Jim McClaflin, EA, NTPI Fellow, CTRC