I have a new client who just hired me to review the work his in-house accountant was doing and especially to check if the company’s payroll taxes were in order.
Guess what? The entire accounting system was a mess! Not only were the business’ books in disarray, but the company’s accountant had not been paying employee payroll taxes to the IRS at the correct rate.
The good news is that we resolved the problem. The bad news for the business owner is that he ended up getting fined by the IRS, even though it was his accountant who made the mistake.
See, the IRS doesn’t care if your employee made a mistake or failed to do their job, the agency will hold the owner, CEO or CFO responsible, no matter whose responsibility it is to write checks or take care of payroll.
To avoid this scenario happening to you, here are some things employers should know:
TAXES EMPLOYERS ARE RESPONSIBLE FOR – Employers are required to pay 6.2% in Social Security tax, 1.45% for Medicare Tax and a percentage of a portion of each employee’s salary in Federal Unemployment Taxes or FUTA, as well as, State Unemployment Taxes or SUTA for full-time or part-time employees.
INDEPENDENT CONTRACTORS – Independent contractors are not eligible for unemployment benefits, so business owners do not have to worry about their payroll taxes.
REVIEW YOUR PAYROLL TAXES – Schedule a bi-monthly or monthly appointment with your accountant or bookkeeper to review your company’s tax responsibility.
We hope these tips help you avoid the unfortunate scenario my new client faced. If you need help or have specific questions about payroll taxes, call or e-mail our DM Accounting team; we are here to help.
Have a wonderful week!
