It’s no secret that for many people who get in hot water with the IRS, a very common reason is payroll taxes. For many, they aren’t filing properly, “assuming” that their bookkeeper is handling it or their payroll software. But that isn’t necessarily the case, I’m sad to say. ☹️ So, this week, I thought I’d give you a quick primer on the subject … because it’s definitely something to make sure your Lake Norman business has covered.
How To Handle Your Lake Norman Company’s Payroll Taxes
“To win in the marketplace you must first win in the workplace.” – Doug Conant Payroll taxes are crucial for Lake Norman business owners, but not many know how to pay them. If you, or someone you know, needs to take care of payroll taxes, please forward them the information below. The IRS made this process simpler through online payments. Therefore, it’s not as intimidating as it may seem. What’s Included? There are a few items included in the taxed payroll given to employees. Consider the following:
- Federal income taxes withheld
- Federal Income Contributions Act (FICA)-related taxes (including Social Security and Medicare)
- Federal unemployment taxes
“Look-Back Period” + Deposit Schedule Depending on your look-back period, you will need to deposit accordingly. How to determine your look-back period? Simply put: it’s the time and amount used for your payroll tax deposit. More pointedly, it’s the total amount of employment taxes reported by his or her employer, over a 12-month period, that culminated the preceding June 30th date. I know that’s a little confusing … consider that payroll tax deposits would be the 12-month period that ended June 30th in the previous year. If you still have questions on the look-back period, please let me know! Give me a call, and I’d be glad to answer additional questions. Once you figure out the look-back period, you will fall into one of three buckets: If payroll obligation is <$2,500 then you deposit a “timely filed return” (with Form 941). If payroll obligation is $50,000 or less, then you deposit monthly. If payroll obligation is more than $50,000, then you deposit semi-weekly. Electronic Federal Tax Payment System (EFTPS) Enrolling in EFTPS allows you to submit payroll deposits online. After you sign up, you will enter your business banking info (account + routing number) and schedule payments accordingly. You have the ability to schedule up to 365 days in advance, and the EFTPS will record all payments for your records. Again, please reach out to me if you have any additional questions on making payroll tax deposits. No matter your payroll status, it’s vital this payment component is a part of your business routine. Similar to holiday bonuses, payroll payments are one way to take care of your people after all of their hard work. And, of course, to stay out of hot water with the ol’ IRS. Warmly, Kristin D. Gravitt Kristin Gravitt, PLLC