While overcoming mistakes comes with the territory of running a business, undoing certain types of missteps can be quite tedious. Some of the most frustrating mistakes to correct are payroll tax issues.
Despite your best efforts, you may occasionally make simple payroll tax mistakes and have to backtrack to remedy them. Unfortunately, these mishaps are frustrating to fix because you likely won’t catch them until filing your year-end taxes.
To help you avoid drawing the ire of the IRS, we have compiled this guide to three simple payroll tax issues. More importantly, we show you how to prevent them by implementing a total business solutions approach for managing payroll and staff.
Top 3 Simple and Avoidable Payroll Tax Issues
The complexities of the tax system make it all too easy to make payroll-related mistakes. While there are many possible ways your payroll-related tax management processes can run amok, the issues you are most likely to encounter include:
1.Failing to Withhold Federal Taxes
According to U.S. tax law, you are mandated to withhold income tax from your employees’ paychecks. You must also withhold Medicare and Social Security taxes. Failing to do so has several severe consequences.
For starters, you will have to pay taxes on wages already paid to your staff. This will send your tax liability through the roof. Additionally, you will likely incur significant penalties. Under the worst of circumstances, you could even face criminal charges.
2.Making Late Payroll Tax Payments
Although making late payments is not as severe as not paying altogether, this issue can still hurt your bottom line. Typically, the IRS charges 0.5% interest on your overdue tax amount. The longer you take to make payroll tax payments, the more interest you will accrue. If you become delinquent, the IRS may tack on a 25% fine to your total amount owed.
3.Neglecting to Issue 1099s
Do you use contractors or freelancers? If so, then you had better be issuing 1099s. You are required to issue 1099s to any entity that you pay $600 or more in a given tax year. You will need to send the IRS copies as well.
If you forget to send out 1099s, you will incur more penalties. Adding extra fees and fines to your tax liability is the IRS’s standard approach for addressing any compliance issues, no matter how simple they are to remedy. When it comes to 1099s, the IRS charges $75 per form that you failed to issue.
Working with Simpay will allow you to have access to comprehensive payroll tax solutions to help you avoid payroll-related tax issues. Our dynamic team can assist with payroll tax filings in all 50 states in every type of industry.
Avoid Payroll Tax Issues
Outsourcing your Payroll and HCM total business solutions will helps you avoid hefty fees while operating your business. as You’ll simplify the process of managing your payroll tax obligations and rely on experts to manage the details. You can start taking all the guesswork out of filing your taxes and have peace of mind knowing you’re navigating the process correctly.
Becoming informed about common payroll tax issues can allow you to improve your processes. Utilizing payroll tax solutions can streamline your processes as you work with experts who assist you in protecting the future of your business.
Contact Simpay today to learn just how easy it is to set up your payroll & HCM and get back to doing what you do best – Running your business.