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.

Consult your accountant about 2006 tax breaks and then talk to your receivables factoring company to make them a reality.

We are nearing the holiday season, which signals end of the year tax planning time. I am no accountant, but I do know questions you can ask yours – and I definitely can advise you on how invoice factoring can assist you in taking advantage of the 2006 tax breaks for small business owners.