There are a few basic, yet important, rules that many new business owners learn the hard way. We’ll list them here in the hopes that it can save you from the same mistakes:
1. Report your payroll taxes. Yes, that means all of them on all of the nice little forms, and when the reports are due. This means reporting them on time, every time!
2. Make sure that your deposits are accurate and on time. Only an act of God can save you from IRS penalties and fines if they are levied against you of your company.
3. Use a payroll software package such as Quick Books, which includes a payroll module to ease the payroll process. Get to know the payroll features to save yourself a ton of time and uncertainty. Thousands of merchants have consistently used Quick Books’ payroll features and have been very pleased with its accuracy and ease of use because you can get the needed numbers from the system relatively painlessly.
4. Find someone who understands the payroll tax calculation and reporting process. Have them show you their completed forms and walk you through the process when you first start issuing payroll checks.
5. Stay on top of things, and always include the additional payroll tax expenses when considering an employee raise. Perhaps you should offer your employee additional benefits instead of a raise because a raise has the additional payroll taxes attached, and certain types of benefits do not incur the incremental taxes.
The payroll tax reporting and deposit procedures will eventually become second nature to you, but it is definitely confusing when you first start out. Many people have a hard time finding all of this information in one spot and they make some serious blunders that cost thousands of dollars. Don’t make the same mistake. Get the right advice early in the process and follow it. The late fees are tough to swallow.
As a final note, don’t fiddle with these taxes. If you look at where the money comes from, you can see that you are holding your employees’ money until deposited. If you are delinquent in making these deposits for any length of time at all, it might be viewed as theft and you can get yourself into serious legal trouble that you really don’t want. Don’t take chances with payroll tax liabilities. If your company goes under, you still owe these taxes, so pay these guys be- fore you pay everyone else.