Payroll Tax Problems

The Most Common Payroll Tax Problems

Making mistakes is a natural part of life, and even small businesses are not immune to making an occasional mistake. But it’s important that we learn from our past so as not to repeat these errors in the future. That’s why at Priority One Payroll, we do our best bring you information on how make sure your payroll taxes get taken care of correctly the first time around – or tips for fixing any problems should they occur!

Small-business owners must comply with payroll taxes, and they will encounter some problems when doing so. The IRS takes all tax problems seriously, but can be more demanding and aggressive when it comes to small business paychecks. Here is a list of the most common pitfalls:

 

The first mistake many employers make is not reading through their state’s labor laws before making employees sign contracts or offer raises; this leaves them vulnerable if an employee ever disputes that what was written down on paper matches the terms agreed upon orally (like how much time off they are entitled to). Avoiding misunderstandings by always getting everything in writing may seem like added bureaucracy for both sides, but it saves everyone from costly litigation fees once something goes wrong later on.”

Failure to Withhold and Pay Federal Taxes

When you hire an employee, it is your responsibility to take them off the table. That means withholding taxes from their wages or salary so that they don’t have a high tax liability on payday. If we as business owners fail in this obligation and then try to get away with not paying those withheld funds over, there are severe consequences including fines and penalties which will be imposed by the IRS.

Late Payroll Tax Deposits and Payments

When you hire an employee, it is your responsibility to take them off the table. That means withholding taxes from their wages or salary so that they don’t have a high tax liability on payday. If we as business owners fail in this obligation and then try to get away with not paying those withheld funds over, there are severe consequences including fines and penalties which will be imposed by the IRS.

Failure to Issue IRS Form 1099

One of the most common problems that employers face is failing to issue IRS Form 1099. If you pay an outside company or individual $600 or more in any year, then it’s your responsibility to provide them with a copy of IRS Form 1099 and send copies on over for filing at the Internal Revenue Service. It should be noted that this applies even if they’re only paid as subcontractors who work under someone else rather than directly by you – so make sure not to give anyone contractually obligated money without issuing their own form!

Failure to Issue IRS Form W-2

Your small business may need to go the extra mile this year if you have employees. You are required by law to ensure that all your employees receive their IRS Form W-2, formally known as Wage and Tax Statement, which is typically mailed on or around January 31 of each subsequent tax season. However with many people leaving jobs in December it can be difficult for employers who must mail out these forms before February 1st because some outgoing postal services will no longer deliver after New Year’s Day due so really make sure that everyone gets theirs!

Calculation Errors and Mistakes

Errors in math and calculation can be costly for small business owners. One of the most common errors is forgetting to round up a number before entering it into payroll tax reporting forms, which could result in paying taxes as if they were late with fines or penalties.

Another mistake many people make when calculating out their withholding rates on their payroll’s income tax reports are simple math mistakes that lead them to pay more than what was due originally, just like if you missed deadlines for those payments! They may also find themselves having too much taken out – meaning less money coming home from work each week because there weren’t any consequences imposed by missing payment deadlines early.

The IRS does not grant an exception for taxes that were underpaid due to a math error. The IRS simply deems the payment late and charges interest, fines, and penalties accordingly. If your calculation errors resulted in overpayment on tax payments you may be able to request refund- but it will generally require much paperwork (which can also take time).

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missionhillstax.com

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Mission Hills Tax Service, INC 928 Fort Stockton Dr, Ste 110 San Diego CA 92103
b/t Hawk St & Goldfinch
Jasmine Jones, EA
Janet Cooper, CTEC Preparer
Jo-re Lawson, CTEC Preparer/Bookkeeper
Celeste Pryor-Davis, CTEC
Preparer/Office Manager
Trinity Davis, Receptionist.