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How To Avoid The Perils Of Payroll Taxes - Articles Surfing
It is the nightmare scenario for every business owner. A letter from the IRS arrives demanding payment for unpaid payroll taxes. The statement list the amount owed along in addition to penalties and interest. Thousands of businesses are faced with this situation every day. Even worse, many of these companies are forced into bankruptcy every year when they are unable to make the payment demanded.
The IRS also considers the problem of unpaid payroll taxes significant. "Payroll taxes represent a significant portion of the IRS's accounts receivable," says Carolyn Stumpf, a spokeswoman for the agency. Fines for a business that collect the taxes but fail to pay the IRS are significant. The IRS considers this their money that is simply held by the business.
But most unpaid payroll taxes are a function of mistakes rather than deception. Depending on the size or your company the time to file is quarterly, monthly or even the day after payday. Missing the due date by even one day can generate a sizable fine. Knowing what to forms to file and when is scheduling problem for a business owner with a million other things they are working on.
Timing is not the only problem. The tax rates that must be withheld are a moving target that often changes as often as congress is in session. There are rates for Social Security and Medicare taxes that have rates for withholding from the employee and the employer contribution. These two taxes sum to the Federal Insurance Contribution Act, FICA.
Federal Unemployment Tax and Federal Income taxes must also be collected from each employee. And that is just for the federal government. There are also taxes that must be collected for the state and even some local governments.
The various rates, numerous schedules and countless forms are enough to make a business owner's head spin. But the failure to get it exactly right is even scarier.
The process starts with a letter and then a phone call. If not corrected the an IRS agent will pay you a visit. If they determine your business is salvageable they can work out a payment plan. If, however, they determine your business is failing then they can sell your assets to collect the money ahead of your creditors.
An even worse scenario exists. The IRS can peruse the business owner or the officers of the company for the unpaid taxes if it defaults.
With such a complex system and such steep penalties it is not surprising that so many companies are turning to payroll services to help them navigate the payroll tax maze. But what criteria should you use to find the right service?
Liability * If there are ever mistakes will your payroll company stand behind you and pay the fines or do you maintain the liability for any errors? You also want to make sure they have the financial security to backup their promises if ever needed.
Access - How will you enter your payroll information? Some services have websites or you may need to call it in to their representative.
Customer Service * If there are ever any changes you need to make how easy is it to contact the service. Make sure you can get a real person on the phone if that is ever needed.
Price * Your costs will primarily vary by how many employees you have and how often you run payroll. Make sure you ask about any additional charges like check delivery or quarterly filing.
By getting several quotes and doing some due diligence you will be getting a good payroll service at a reasonable price. Now you can back to running your business instead of untangling the payroll tax knot.
Copyright © 1995 - Photius Coutsoukis (All Rights Reserved).
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