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.
The IRS relies upon business owners to self-report and self-deposit the taxes withheld from employees’ checks and the employer matches. The taxes collected are employee withholding, FICA (Social Security) and Medicare. To help the IRS collect these taxes, the IRS has the authority to impose huge penalties and interest on businesses and responsible parties for non-reporting and non-payment of taxes; the IRS usually gets its way when it pursues a business or responsible party.
Here is the first of five things you need to know to protect your business: accurately calculate payroll taxes – and then pay them!
Because the IRS charges businesses with the fiduciary responsibility of collecting and paying taxes, the simplest way to avoid any penalties and interest is to pay your taxes. For smaller businesses that do not have experience with payroll, there are companies that will calculate payroll taxes and then cut checks or direct deposits for employees.
These companies will also make the necessary tax deposits and file the appropriate forms. Smaller companies with the ability to establish internal payroll can utilize account software packages like QuickBooks or Peachtree to calculate payroll taxes and, with some initial guidance from an accountant or experienced bookkeeper, can make their own tax payments at their bank or electronically through the Electronic Federal Tax Payment System (EFTPS).
Discover more about the requirements for employer tax payments by downloading or printing out (Circular E) Employer’s Tax Guide.