Payroll taxes can be complicated, and they can create situations where your business ends up in hot water. Keep this information in mind when it comes to avoiding payroll tax problems.
When you withhold money from employees’ paychecks for FICA and income tax, that money does not belong to you. You cannot use that money to pay business expenses. Instead, it must be fully accounted for and turned over to the IRS in a timely fashion. If you do not handle your payroll taxes appropriately, you are going to end up with payroll tax penalties and other less-than-desirable outcomes.
Payroll taxes must be withheld for employees; they do not have to be withheld for independent contractors. But determining who is an independent contractor can be surprisingly complicated. Misclassifying an employee as a contractor can create issues, as you won’t be paying the federally required payroll tax. Make sure any team members are classified correctly to avoid this issue.
Payroll tax problems can be considered a federal crime, and even minor issues can snowball rapidly due to IRS penalties. If you’ve received notice of this type of business tax problem, do not hesitate to contact Price Advantage Accounting right away. Our enrolled agents and other tax help professionals are available to help your company overcome its payroll issues. With more than 40 years of experience providing business tax resolution services, we can help you steer clear of payroll tax penalties and work to eliminate them if you’re already in trouble with the IRS. The Price Advantage Accounting team is here to serve you!