As a small business owner, you have a lot of things that you have to deal with each day. You have to make sure that your employees show up to work when scheduled, that production quotas are met and much more. The last thing you want is to deal with the IRS because of an error in your payroll taxes. Payroll taxes can be very confusing, which is why you are better off turning to the help of a trusted accountant to handle it for you. In doing so, you can avoid the mistakes below.
Misclassification of workers.
One of the biggest mistakes employers make is not classifying their workers properly. If the individual is an independent contractor, the only thing an employer has to worry about is giving them a 1099-MISC when they earn more than $600 in the calendar year. That isn't the case for an actual employee who gets a W-2 at the end of the year. You cannot just mark an individual as an employee or contractor because you feel like it. You have to classify them based on the amount of control you have over the individual. If they are an employee, you are the one who tells them when, how and where they are to do their work. Independent contractors have more control of what they are going to do and when they are going to do it.
Not keeping your payroll records.
It is your job to maintain accurate payroll records. If the IRS comes knocking and wants proof of any time sheets, expenses, payroll records and W-2s, you better be able to provide them. Hold onto the documents for at least a few years just to be on the safe side. For help, contact a payroll services company.
Putting the IRS on hold.
Oftentimes, businesses find themselves in a situation where they have to choose between paying the utility company or the IRS. Whatever you do, don't put the IRS on the backburner. It is only going to end up costing you far more in the end than it is worth. Your best bet is to try and plan ahead by putting a certain amount to the side each month to cover your taxes when they come due. This will save you a lot of hassle and added penalties and fees down the road.
With so many intricate rules pertaining to taxes, it makes sense that you turn everything over to a professional accountant to handle it for you.