For small business owners, it can get tricky in gloomy economic times to keep up with making payroll tax deposits to the IRS.Â Oftentimes, the challenges could be simply about how to keep the lights on while still paying employees every month.
In recent months, the IRS has been pressured to close down on the $345 billion a year tax gap by going after the largest contributor of this tremendous sum of uncollected money: small businesses. With the IRS closing its grip on enforcing tax payments, it is crucial for small business owners to know what they can do to safeguard their business from serious IRS problems.
Here are a few small business payroll tax tips to stop delinquent payroll tax problems before they start:
* Plan ahead: Budget at least 10% of an employee’s annual salary for payroll taxes (Check with your accounting professional to make sure that number is high enough for your locale).
* Use a service to handle the payroll so you won’t be tempted to dip into the payroll tax fund.
* Use Electronic Federal Tax Payment System or EFTPS to automatically send payments. The computer won’t “forget” to send your payroll taxes.
* Look at your head count. Perhaps you can use independent contractors instead of employees. Check out the IRS web site for Independent Contractor (Self-Employed) or Employee test to see if this payroll tax slashing tip works for your small business.
* File your tax return on time, even if you don’t have the money to pay your tax bill. If you can’t afford to pay your taxes, you can still file your return on time and save 25% on the failure to file penalty right off the bat. What many people don’t understand is that filing an extension just puts off the inevitable, because it’s not an extension of time to pay, it’s just an extension of time to file. So what we tell our clients is that no matter how much is owed, if they enclose a check for $5 or $10 with the return and file it on time, it will reduce their filing penalties. Additionally, it creates a computerized record of account at IRS showing that you sent in a payment with your income tax return (reflecting good faith and credibility on your part).
If you do find yourself in trouble with the IRS, it is never too late to fight your case and abate your IRS penalties. A tax attorney can significantly maximize your chances of winning against the IRS.
Read more about IRS Payroll Penalties.
If you are a small business owner and are facing payroll tax problems, seek professional tax help now!Â Tax Resolution Services is a nationwide professional tax solution company with a team of tax attorneys and IRS specialists who can help you find tax relief.Â Free tax consultation – sign up on our website or call us at 866-IRS-PROBLEMS (866-477-7762).
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