Say “so long” to your IRS federal tax deposit coupons and manual deposits at your bank!

Today, we got a notification from the IRS announcing a regulatory change eliminating Forms 8109/8109B for making federal tax deposits. Effective January 1, 2011, you will no longer be able to make your tax deposit manually at your local bank.

I have blogged previously that it is important to make sure that you are timely in your payroll tax payments, and now it’s important for you to check with your bank or financial institution to find out its cutoff date for accepting federal tax deposit coupons to make sure your final manual deposit is not delayed.

Credit for business: Time to switch to “Plan C” – and the “C” stands for cash.

In the first part of my blog post about funding small business, I talked about a Wall Street Journal (WSJ) article that shared how banks were often still denying credit – despite the loosening of the credit market – for companies with under $1million in annual revenue. And, companies that exceeded that amount could be turned down for small business funding if they were in the “wrong” industries.

So, the question is, where does a “small” small business owner in the “wrong” industry go for cash to meet ongoing payroll (and other needs) to continue to grow? What can you do when the bankers are “actively recruiting the smallest of businesses –not necessarily to extend credit, but instead to process their deposits and help manage their cash flow” – so when they fit the bank’s definition of “small” and “they become ready for a loan or line of credit, the banking relationship will already be well-established?”

Times are tight for small businesses and for small business funding.

I’m sure I’m not telling you anything you don’t know when I say times have been – and continue to be – tight for small businesses. But, as we emerge from the recent credit meltdown – and credit for business begins to loosen – we are finding that not all “small” businesses are benefiting from the easing in the credit markets.

A recent Wall Street Journal (WSJ) article points out that banks are lending again, and the volume of deals in the small-business credit market reflect that trend. But, the article also mentions that things are very uneven. In fact, many companies are being shut out because they are too small or in the wrong industry. The WSJ writes that “much of the money is going to the ‘big’ small businesses.” The article suggests that “small” is a relative term, and that companies with less than $1 million in annual revenue aren’t sharing in the renewed growth in credit for business.

Find valuable information about payroll taxes – 940 payments, 941 payments and more – that business owners and managers need to know.

First, it makes sense to clarify where the money comes from to make 940 and 941 payments. In fact, these payroll tax obligations are made up of two different revenue streams:

1. The first stream consists of monies withheld from an employee’s check – the employee’s contribution to social security, Medicare and income tax withholding. These are also known as trust fund taxes or trust fund obligations. They are called that because the business – and the responsible parties/owners of the business –is withholding an employee’s share to be paid to the IRS. Therefore, the business and the responsible parties/owners have a fiduciary duty to make sure that these withholdings get to the IRS.
2. The second stream of monies that make up 940 and 941 payments are known as employer matches. These funds are contributions made by each employer. The business is responsible for matching certain employee contributions.

Don’t miss any 940 payments – or 941 payments – on your payroll taxes. Find out why!

Because the IRS relies on upon each business to report its 940 payments / 941 payments, it enforces very strict rules and steep fines to make sure that everyone complies by faithfully making their payments and filing their returns on time.

Find out how steep the payroll tax penalties can be!

In a song, “You Don’t Mess Around With Jim,” lyrics warn us against messing with someone named Jim. So, what does that have to do with payroll taxes?

We have all heard these lyrics written by Josh Turner and made a Top 10 Hit (8) by Jim Croce in 1972 and, if your company has ever fallen behind on your payroll taxes (940 payments and 941 payments) with the IRS, you may have thought the lyrics should read, “And you don’t mess around with the IRS.”

When cash is tight and you are facing those weekly 941 payments, it is tempting, as the old saying goes, to “rob Peter to pay Paul” and catch up next week.

Important tax news: payroll tax penalties and interest are real, and very difficult to get waived.

So you have a problem with your payroll taxes. You got the letter – “Urgent!! We intend to levy on certain assets. Please respond NOW.”

What you do next may make the difference between your business surviving or folding. The IRS has a really big gun and they do not hesitate to use it on people who try to hide, lie or talk their way out of the situation. That big gun is called the Trust Fund Recovery Penalty and it is scary – 100% of the amount due. The most important thing to do is to attack the problem honestly and head-on.

Discover two more tips - #3 and #4 out of five – about payroll taxes that will help you to protect your business.

First, discover the importance of paying payroll taxes on time – and the tax news that you need to know about the 1099 independent contractor trap! Then, here are two more important tips:

1. Late payments are killers of your net profit margin.

Imagine that you were just awarded a huge new contract and, because it was a highly competitive bidding process, you were forced to really cut your margins dramatically and, when it is all done, you can expect to make 5% after all your expenses. Perhaps this is not a typical net profit margin on a smaller deal – but it makes a lot of sense because it keeps your people fully utilized.

Number 2 of five things you need to know about the IRS and payroll taxes to protect your business: avoid the 1099 independent contractor trap.

Many companies try to avoid the time and expenses involved in withholding payroll taxes and paying the employer match by hiring their workers as 1099 independent contractors. I have seen this strategy attempted many times and, although it can be an attractive idea, it can also be a huge trap.

If you pursue this strategy, you must do so very deliberately because it can backfire and, despite your honest intentions, if IRS determines that your 1099 contractors are actually employees, you can be responsible retroactively for taxes, penalties and interest. The IRS has what is sometimes called “the list,” which lays out the twenty-seven questions or qualifications that each and every worker must meet to qualify as an independent contractor.

Five things you need to know about the IRS and payroll taxes to protect your business

We have all heard the cautionary tales about companies and their ownership running afoul of the IRS. The IRS is charged with the task of collecting taxes from individuals and businesses in the United States and the most famous tax day in the US is April 15 of every year.

What many people are not aware of or do not understand is that the IRS collects taxes every day from individuals and businesses in the form of the Employer's Quarterly Federal Tax Return or Form 941. However, if you are a business owner with employees, you are very aware of Form 941 and the constant pressure to make your daily, semi-monthly deposit or monthly deposits.