Unfortunately, this happens a lot and can lead to the IRS breathing down your neck, but that doesn’t have to be your situation. Instead of waiting for that phone call from the tax man, be proactive. Learn about payroll tax laws and implement a few solutions that can really help ease the stress of your job.
Tax laws are always a hot topic of debate in Washington and they can change from year to year. As much of a pain as that is, it’s important for you to stay up-to-date about what is going on and what is expected. For instance, the current tax cut put in place back in February allows for a reduction of two percentage points in the payroll tax, which allows the average house to take home around $20 extra a week. However, the tax cut is only expected to last through the end of 2012, so you will need to pay attention to what happens when it’s over.
Fill out paperwork
The government likes to send paperwork to businesses and, often, it isn’t clear what the paperwork is for. There’s a good chance this paperwork could get lost in the mountains of other papers that reside on your desk. This is a big no-no. You don’t want to delay completing that paperwork because delinquency could result in fines. If you aren’t sure what the paperwork is for, contact the branch of government it’s from and figure out what’s going on. Sometimes, paperwork and bills are sent to the wrong address and the wrong business. If you aren’t expecting it or can’t easily find out why you are receiving it, you might have received it by mistake.
Keep good records
Keeping your own records ensures you know every detail of your company’s business. No matter how hard you try to avoid that audit, it may still happen. If you are audited, you will want to be sure you have accurate and thorough records. Keeping records allows you to monitor the business, keep track of deductibles, prepare tax returns and prove the rationale for your tax deductions.
Use a payroll service
When in doubt, turn to a professional. If you haven’t been properly trained in payroll or payroll taxes, consider using a payroll service. Using a payroll service will free you up from those mountains of paperwork and allow you to focus on what you truly love.
Payroll taxes and any other business taxes can be extremely complicated and you may not have the time for them. It really is okay to reach out and ask for help. Be sure you are paying attention to the laws and that you fill out paperwork on time and properly. Even if you do decide to use a payroll service, it is a great idea to keep copies of all your business’ financial reports and anything else that might come up in a tax audit.