You are Subject to Pay Penalties on Unpaid (or Mispaid) Taxes
Taxes can be extremely complicated for those who are not familiar. Running a business means you are suddenly responsible for paying taxes such as federal, state, local, FICA, FUTA,SUTA and so on. If you are relying on an in-house system for payroll, but are still responsible for manually paying your taxes, this can be daunting. When you process your payroll through an outside provider you get the benefit of having that company handle the tax payments for you. Also, should you have any questions you have the ability to speak directly to a tax professional.
You Miscalculated an Individuals Income
Did you know that when you give employees gift cards the dollar amount of the gift card needs to be calculated into their income? This is because gift cards are equal to cash, meaning they should be included in taxable wages no matter the amount. Also, this applies for reimbursed travel and commuting expenses as well (only if the travel/commute is not work-related). If your employees expense their non-work related travel and you reimburse it, that becomes a portion of their income.
According to the IRS website any fringe benefit you provide is taxable and must be included in the recipient’s pay unless the law specifically excludes it. If you are interested in learning more about what income is taxable and what is not, please refer to IRS Publication 525.
You Failed to Issue Proper Forms
If your company used a vendor this year (independent contractors included) and that vendor provided more than $600 in services, they must be issued form 1099. If you do not issue this form in a timely manner, your company can be charged penalties by the IRS.
Purchasing a SaaS solution for your payroll needs ensures you are:
- Paying taxes accurately and on time to avoid penalties.
- Working with payroll professionals who understand the ins and outs of payroll and can guide you.
- Distributing the forms required of you to your employees.
Interested in learning more about how payroll software can help your business? Request a quote and we will reach out shortly.