Payroll taxes are an unfortunate reality for business owners, many of whom struggle to report on and remit withholdings to the IRS. Mistakes are all too common, with some leading to such harsh consequences as garnished accounts or even criminal penalties. These issues can often be avoided, as we demonstrate below:
Many IRS issues can be avoided simply by reviewing forms to ensure that all information is entered correctly. Manual errors are all too common, with many well-meaning individuals inadvertently entering one or two numbers out of place. Unfortunately, these seemingly minor mistakes can hold huge implications.
Some business owners conscientiously check and double-check income and withholdings, only to include the wrong Employee Identification Number. This could result in failure to file penalties. If you doubt your ability to complete tax forms correctly, you may be better served by working with a tax professional.
Reporting on withholdings for standard income is typically straightforward. Additional income, however, can throw you for a loop. This is especially true of tips, which, like typical income, must be reported on Form 941.
Employees are responsible for reporting on tips, but not all do so accurately. Employers, in turn, must retain tip reports and cover payroll taxes based on both tips and standard income. The good news? Employers are not liable for unreported tips. That being said, keeping track of tips can prove surprisingly difficult, with many well-meaning employers making significant errors as they complete this crucial element of Form 941. To prevent future issues, implement a detailed tip reporting and recordkeeping process.
Whether you messed up with your 941 taxes or are determined to avoid issues in the future, the Highland Tax Group can help. Contact us today at 720-398-60088 to learn more about our business tax services.