If you’re a business owner, then you know that payroll and taxes go hand-in-hand. After all, payroll is how you ensure that your employees are getting paid correctly and on time, while also withholding the appropriate amount of taxes from their paychecks. Taxes are how you ensure that you’re contributing your fair share to the government.
Payroll accounting is the process of tracking employee compensation and taxes. It can be used to make sure that you are compliant with all tax laws and regulations.
But what you might not realize is that there’s more to compliance than just writing a check to the IRS or tax authorities every quarter. There are actually a number of payroll-related tax compliance issues that you need to be aware of, and taking care of them can be tricky if you’re not sure what you’re doing.
Here are some payroll tax compliance tips that every business owner should know:
Keep accurate records of your employees’ hours worked.
This may seem like a no-brainer, but it’s actually one of the most important things you can do to stay compliant with payroll taxes. Accurate timekeeping records are essential for calculating withholdings correctly – and if you don’t have them, you could end up owing the government a lot of money.
Make sure you’re withholding the correct amount of taxes from your employees’ paychecks.
Calculating withholdings can be complicated, but it’s important to get it right. The last thing you want is to under-withhold taxes and end up owing the IRS at the end of the year.
Stay up-to-date on changing tax laws.
Tax laws are always changing, and it’s important to stay on top of the latest developments. This way, you can be sure that you’re withholding the correct amount of taxes from your employees’ paychecks, and avoid any penalties or interest charges. Payroll accounting software can help you stay up-to-date on changes in tax laws.
File your payroll tax returns on time.
This may seem like another no-brainer, but it’s actually one of the most common compliance mistakes that business owners make. Filing your payroll tax returns late can result in significant penalties and interest charges – so be sure to set a reminder for yourself and file on time.
Pay your payroll taxes on time.
This is another common compliance mistake. If you don’t pay your payroll taxes on time, you could be subject to late payment penalties – and if the IRS believes that you’re deliberately trying to avoid paying your taxes, you could even be subject to criminal charges.
Deposit your payroll taxes in a timely manner.
If you have employees, you’re required to deposit payroll taxes on a regular basis. The frequency of your deposits will depend on the amount of taxes you owe – but regardless of how often you have to make a deposit, it’s important to do so in a timely fashion.
Use electronic payment methods.
When paying your payroll taxes, you should use electronic payment methods. This will help to ensure that your payments are received on time and that you do not have to worry about mailing in a check.
Hire a payroll accounting service.
If you are having trouble staying compliant with payroll taxes, you may want to consider hiring a payroll accounting service. This can help to take the burden off of you and ensure that your business is compliant with all payroll tax laws.
Following these tips will help you stay compliant with payroll taxes – and avoid any penalties or interest charges. But of course, this is just a general overview. For more specific advice, be sure to speak with a qualified tax professional.