As a business owner, one of your responsibilities is to make sure that you pay your taxes, including your end of payroll taxes. Not only that, but you also need to make sure that you pass on your employees’ portion of the payroll taxes to the government.
If you aren’t careful, you could end up with past due payroll taxes, and all of the penalties that go with it. Here are some things you should know about paying payroll taxes:
You Shouldn’t Borrow from Payroll Taxes
It can be tempting, especially if you are on a tight budget, to borrow from your payroll tax fund to cover operating expenses and other items. However, it’s important to remember that the money isn’t yours. The money you take from employee paychecks for payroll taxes should be passed on to the government as soon as possible.
Don’t hold back your end, either. Borrowing from payroll taxes is illegal, and you need to make sure that you aren’t involved in that type of activity. Make your payments as quickly as you can to ensure that you are tempted by the money sitting there.
Penalties Add Up to Make Your Debt Bigger
Your tax bill can balloon in size with the help of penalties. When you don’t file your taxes, or if you haven’t paid your payroll taxes, the IRS can add penalties and interest. This increases your tax bill quickly. The main penalties you might see as a result of your payroll situation include:
- Failure to fail
- Failure to deposit
- Failure to pay
You need to make sure you are in compliance with all three of these issues. Once the penalties start piling on, they also start accruing interest, and that can make your debt even bigger. The longer you go without taking care of the tax debt, the worse it will be.
The IRS Can Seize Equipment and Take Other Actions
When your tax debt is on the rise, including when it’s due to payroll taxes, the IRS can do what it takes to collect. This includes seizing equipment and intercepting payments from people who owe you money. If you aren’t careful, you could find yourself struggling to pay the bills as your assets are use to pay off the payroll tax debt you have.
And don’t forget that not paying your taxes, including your payroll taxes, you might be subject to criminal investingation and charges. The IRS has to prove that you are doing this intentionally, and it’s not something that happens a lot with most small business owners, but it’s always a possibility.
If you are having trouble paying your end of the payroll tax, it’s a good idea to get professional representation and then try to work with the IRS as soon as possible. The IRS offers different plans for individuals and for businesses to meet their obligations. However, the bigger your tax bill is, the more difficult it will be to make arrangements with the IRS. As a result, it’s important to carefully consider your options and turn to a professional or an accountant for help if you need it.