As an employer, you must pay employment taxes if you have employees. Fail to pay and the IRS will rain all over your parade.
Penalties
If you have employees, you absolutely must deduct and withhold various taxes from the paychecks of your employees. Since you are deducting money from the employee's paycheck, you are handling their funds. This fact is very important to the IRS and it places great emphasis on any failure to deposit employment taxes.
If you fail to pay employment taxes, you will be subject to a 100 percent penalty. Yes, 100 percent. Known as the "trust fund recovery penalty", the penalty is assessed against the person responsible for paying the taxes, not the entity. The person can be the owner, corporate officer or other "responsible person." In short, a business entity is not going to protect you from the wrath of the IRS.
Late Payments
Cash flow crunches are an inevitable event for practically every business. So, what happens if you make a late payment for employment taxes. Unless you can show a reasonable reason for the delay, the IRS is going to penalize you.
Late payment penalties range in amount depending on the delay. If the delay is less than six days, the penalty is two percent. Delay for six to 15 days and you are looking at five percent. More than 15 days in delay is going to push the penalty to 15 percent. If you delay this long, the IRS will be peppering you with penalty notices telling you where you stand.
In Closing
Whatever you do, make sure you deposit employment taxes with the IRS in a timely fashion. Take a moment to think about the worst thing you have ever heard done by the IRS. If you fail to pay employment taxes, the actions taken by the IRS will be ten times worse and you will be the one telling horror stories.
Richard Chapo is with http://www.businesstaxrecovery.com - recovering overpaid taxes for small businesses. Visit our article page - http://www.businesstaxrecovery.com/articles - to read more tax articles.
In the latest Star Wars episode, the evil empire executes... Read More
All states also have their own tax system. Typically there... Read More
If your like many, you don't always understand what people... Read More
As a sole proprietor, it's wise to familiarize yourself with... Read More
"Depreciation." For business owners, this word is the one most... Read More
You've been feeling uneasy (perhaps even guilty) because you've failed... Read More
Marketing is a necessary expense in running practically any business... Read More
Ever wish that, as a business owner, you knew exactly... Read More
According to the IRS, taxpayers underpay their taxes by some... Read More
A Federal Tax Lien (FTL) is a legal instrument that... Read More
Deduction of Refinance PointsAny points that you pay in the... Read More
Why a Corporation Helps Save You TaxesThe Tax Rates (Notice... Read More
Estate taxes. It's not enough to simply know they exist,... Read More
So, you were pleasantly surprised to learn that you are... Read More
Many taxpayers are confused about how long they should keep... Read More
Q: I was contacted by the city tax collector to... Read More
The end of tax filing extensions is quickly approaching. What... Read More
Millions of people file tax return extensions every year. The... Read More
The 100 year old investment-banking firm of... Read More
Import duties continue to be significant elements in the cost... Read More
The powers of Congress, and the limitations set upon those... Read More
The U.S. Department of Agriculture estimates that it costs nearly... Read More
Self-assessment relies on taxpayers voluntarily meeting their tax obligations. This... Read More
If you are a Small Business Owner or Self-Employed Person,... Read More
If your business has employees, you must pay employment taxes.... Read More
The electronic transaction ordinance defines the certificated copies in which... Read More
On June 3, 2005, the IRS released guidance on charitable... Read More
An early distribution from an Individual Retirement Arrangement (IRA) or... Read More
If your identity is stolen, your finances can quickly become... Read More
Excerpted from the new book, "How to Do Space Age... Read More
Donating your used car to charity is a win-win situation;... Read More
While accountants are reaching for aspirin, millions of Americans are... Read More
In the rush to get tax returns prepared and filed... Read More
An early distribution from an Individual Retirement Arrangement (IRA) or... Read More
The United States is a nation of entrepreneurs. There are... Read More
Beware of advertisements that claim to settle tax debts for... Read More
Recently, I stumbled across a concept that could change your... Read More
Hit a big one? With more and more gambling establishments,... Read More
The federal tax code is complex. This complexity generally arises... Read More
Many Americans believe that an IRS debt is a debt... Read More
Choosing the right tax preparer for your business is a... Read More
For many business owners the answer to this quandary is... Read More
"Settle for Pennies on the Dollar! IRS debts settled for... Read More
Just image, you are a small manufacturing company, business has... Read More
If you are environmentally conscious and purchase a 2005 Ford... Read More
Your days as an entrepreneur and businessperson are consumed with... Read More
In trying to comply with tax laws for your e-business,... Read More
QUESTION: I have been contacted by my local city... Read More
One can never underestimate the enthusiasm that politicians have for... Read More
Practically every small business has receivables that it cannot obtain... Read More
Should I take wages or dividends from my privately owned... Read More
OverviewIn the Pre-Budget Report of December 2003 the Chancellor Gordon... Read More
No one likes paying tax. Everyone understands that tax is... Read More
Yes, the tax season is upon with the first filing... Read More
As teachers and students head back to school following a... Read More
It's a moment every person dreads. You pick up the... Read More
Adding Your First Additional Stream of IncomeMost new wealth builders... Read More
Anyone who is closely related to an accountant knows that... Read More
It's that time again, the April 15 tax deadline is... Read More
Someone once remarked, "Next to being shot at and missed,... Read More
The knock on the door from a Tax Inspector is... Read More
It's a major fear for most Americans: A notice from... Read More
Someone once said, 'the best way to calculate your taxes... Read More
Millions of people file tax return extensions every year. The... Read More
The powers of Congress, and the limitations set upon those... Read More
1812The first attempt to impose an income tax on America... Read More
Tax |