You probably know that as a business operator or owner, you must pay your taxes. Any time you neglect to do so, you’re asking for trouble. You must pay federal taxes, but also state and local ones.
You might not think about unemployment taxes when you start a business, but that’s another fee you should never neglect. You generally pay them quarterly, and you should have them in your operating budget, so they don’t blindside you. If you have a company accountant or accounting department, they might be able to warn you if you have one of those payments coming up.
There are some particular unemployment tax planning mistakes that you can make, though. Let’s look at four of the most crucial ones right now.
You can handle this two ways. You can either leave it up to your accounting department, or else you can hire a tax planning agency to assist you. Each option has its pros and cons.
If you hire an outside professional agency, that can be costly. However, if you leave it up to your accounting department to handle your quarterly unemployment tax payments, they might make a mistake. Tax laws often change, and a professional agency will stay on top of all that when your accounting department might not.
The way you’ll know how much you owe in taxes each quarter is through things like worker status and how you determined each employee’s gross pay. You’ll need to look at when you gave which workers raise.
If you have not kept track of that, it’s easy to pay the wrong amount. That is going to earn your business some scrutiny that you don’t want.
Even if you don’t feel like you have the money to pay these taxes on time, you have to file by the appropriate date anyway. If you do that, then at least you’re letting the IRS know you intend to pay. If you decide not to, they’ll slap you with the full failure-to-file penalty.
You can avoid this issue if you place the appropriate amount in a separate account. You’re not to touch that money for any other reason besides paying these taxes.
If you’re considering using that money for some other reason, like covering operating costs, your business is in serious trouble. You’ll need to find some way to get a cash infusion if you want to remain afloat.
For instance, you can remember that you base the taxes on a published rate and that you base them on your workers’ gross pay. You also base them on the first $7,000 you pay each employee per year.
The IRS does allow exceptions in certain instances, though. This is why we mentioned earlier that it often makes sense to hire an outside agency to handle all of this for you. They know when the tax laws change, but they can also let you know if and when you can use those exceptions.
There are other mistakes you can make, like either intentional or accidental worker misclassification. The one thing to remember is that if you tangle with the IRS over poor unemployment tax planning, that’s always a losing prospect on your part. It’s always best to keep meticulous track of how much you owe and use a trustworthy entity to help you.
You might not think about unemployment taxes when you start a business, but that’s another fee you should never neglect. You generally pay them quarterly, and you should have them in your operating budget, so they don’t blindside you. If you have a company accountant or accounting department, they might be able to warn you if you have one of those payments coming up.
There are some particular unemployment tax planning mistakes that you can make, though. Let’s look at four of the most crucial ones right now.
Not Hiring Professionals to Handle These Taxes
If you’re looking for unemployment tax planning mistakes, not picking a professional entity to handle them for you is right at the top of that list. These taxes can be more complex than you might realize at first. If you don’t have the proper training, then, as a business owner, you’re much better off letting someone qualified deal with them.You can handle this two ways. You can either leave it up to your accounting department, or else you can hire a tax planning agency to assist you. Each option has its pros and cons.
If you hire an outside professional agency, that can be costly. However, if you leave it up to your accounting department to handle your quarterly unemployment tax payments, they might make a mistake. Tax laws often change, and a professional agency will stay on top of all that when your accounting department might not.
Shoddy Record Keeping
Your record-keeping efforts had better be adequate as well. If they aren’t, that can be a costly error. You need to keep records that indicate how much you owe in quarterly unemployment tax payments, as well as how you calculated that amount.The way you’ll know how much you owe in taxes each quarter is through things like worker status and how you determined each employee’s gross pay. You’ll need to look at when you gave which workers raise.
If you have not kept track of that, it’s easy to pay the wrong amount. That is going to earn your business some scrutiny that you don’t want.
Not Filing or Late Filing
Some businesses miss the filing deadline because they were not paying attention as closely as they should. Others decide they can get away with not filing one year, especially if they’re in the red.Even if you don’t feel like you have the money to pay these taxes on time, you have to file by the appropriate date anyway. If you do that, then at least you’re letting the IRS know you intend to pay. If you decide not to, they’ll slap you with the full failure-to-file penalty.
You can avoid this issue if you place the appropriate amount in a separate account. You’re not to touch that money for any other reason besides paying these taxes.
If you’re considering using that money for some other reason, like covering operating costs, your business is in serious trouble. You’ll need to find some way to get a cash infusion if you want to remain afloat.
Miscalculating the Tax Amount You Owe
Using the wrong method or incorrect math to arrive at the number you owe can also hurt you. There are fundamental rules you can follow that will help you in this area, though.For instance, you can remember that you base the taxes on a published rate and that you base them on your workers’ gross pay. You also base them on the first $7,000 you pay each employee per year.
The IRS does allow exceptions in certain instances, though. This is why we mentioned earlier that it often makes sense to hire an outside agency to handle all of this for you. They know when the tax laws change, but they can also let you know if and when you can use those exceptions.
There are other mistakes you can make, like either intentional or accidental worker misclassification. The one thing to remember is that if you tangle with the IRS over poor unemployment tax planning, that’s always a losing prospect on your part. It’s always best to keep meticulous track of how much you owe and use a trustworthy entity to help you.
