NEVER GET BEHIND ON PAYROLL TAXES! But, if you do, ask for help ASAP!

Ok, so you start a business and it’s ramping up and pretty soon you’re hiring employees to help with the workload.  This is a very significant milestone, and a significant expense.

The hope (as well as the gamble) is that you have enough revenue to pay the employees, so you can make more revenue.  The trick is to not stay in this phase (the Catch-22 phase) of business growth for an indefinite period of time.  Even if business grows as anticipated, sometimes unanticipated expenses arise that send a company back to just barely making the payroll.

In any case, when money gets tight, the first thing a company begins to do is delay paying the payroll taxes because there may not be enough in the account to pay both the payroll and the taxes (there could be other reasons too, but cash flow is the main reason folks delay paying the taxes).  If the company has a bookkeeper with decision-making ability, the bookkeeper may decide to put off paying payroll taxes.

What’s the big deal with that?

Well, not only are there stiff penalties and interest when the tax is paid only a few days late, but pretty soon one late payment with stiff penalties and interest becomes two and then it snowballs out of control before you know it.

The IRS does not take unpaid payroll tax lightly and will take the opportunity to assess a civil penalty in the amount of the unpaid tax against whomever they conclude has the decision-making ability to not pay the taxes.  This penalty is not limited to just one person but can be assessed against multiple people involved in the decision-making process.

Payroll tax is serious business.  If you have found yourself behind or involved in a payroll tax nightmare, please reach out to me for help!