payroll tax advisors

How to avoid getting hit with payroll tax penalties

Payroll Tax Advisors

For small businesses, managing payroll can be one of the most arduous tasks. Adding to the burden earlier this year was adjusting income tax withholding based on the new tables issued by the IRS. (Those tables account for changes under the Tax Cuts and Jobs Act.) But it’s crucial not only to withhold the appropriate taxes — including both income tax and employment taxes — but also to remit them on time to the federal government.

If you don’t, you, personally, could face harsh penalties. This is true even if your business is an entity that normally shields owners from personal liability, such as a corporation or limited liability company.

The 100% penalty

Employers must withhold federal income and employment taxes (such as Social Security) as well as applicable state and local taxes on wages paid to their employees. The federal taxes must then be remitted to the federal government according to a deposit schedule.

If a business makes payments late, there are escalating penalties. And if it fails to make them, the Trust Fund Recovery Penalty could apply. Under this penalty, also known as the 100% penalty, the IRS can assess the entire unpaid amount against a “responsible person.”

The corporate veil won’t shield corporate owners in this instance. The liability protections that owners of corporations — and limited liability companies — typically have don’t apply to payroll tax debts.

When the IRS assesses the 100% penalty, it can file a lien or take levy or seizure action against personal assets of a responsible person.

“Responsible person,” defined

The penalty can be assessed against a shareholder, owner, director, officer or employee. In some cases, it can be assessed against a third party. The IRS can also go after more than one person. To be liable, an individual or party must:

  1. Be responsible for collecting, accounting for and remitting withheld federal taxes, and
  2. Willfully fail to remit those taxes. That means intentionally, deliberately, voluntarily and knowingly disregarding the requirements of the law.

Prevention is the best medicine

When it comes to the 100% penalty, prevention is the best medicine. So make sure that federal taxes are being properly withheld from employees’ paychecks and are being timely remitted to the federal government. (It’s a good idea to also check state and local requirements and potential penalties.)

If you aren’t already using a payroll tax advisor, consider hiring one. A good payroll service provider relieves you of the burden of withholding the proper amounts, taking care of the tax payments and handling recordkeeping. Contact us for more information.

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q3 key tax deadlines

2018 Q3 Key Tax Deadlines for Businesses

Q3 Key Tax Deadlines

Here are some of the key tax-related deadlines affecting businesses and other employers during the third quarter of 2018. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements. Read More >

estate planning

The tax impact of the TCJA on estate planning

Estate Planning

The massive changes the Tax Cuts and Jobs Act (TCJA) made to income taxes have garnered the most attention. But the new law also made major changes to gift and estate taxes. While the TCJA didn’t repeal these taxes, it did significantly reduce the number of taxpayers who’ll be subject to them, at least for the next several years. Nevertheless, factoring taxes into your estate planning is still important. Read More >

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What businesses need to know about the tax treatment of bitcoin and other virtual currencies

Virtual Currency

Over the last several years, virtual currency has become increasingly popular. Bitcoin is the most widely recognized form of virtual currency, also commonly referred to as digital, electronic or crypto currency.

While most smaller businesses aren’t yet accepting bitcoin or other virtual currency payments from their customers, more and more larger businesses are. And the trend may trickle down to smaller businesses. Businesses also can pay employees or independent contractors with virtual currency. But what are the tax consequences of these transactions? Read More >

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Have Russian hackers broken into your home? VPNFilter attack!

VPNFilter attack –

Main stream media has been heavily covering the recent threat of Russian hackers taking over home Internet routers using an attack named “VPNFilter”.  Here is an article which lists the affected routers: “Is Your Router Vulnerable to VPNFilter Malware?

Time for a WiFi upgrade! –

As outlined in the article above, updating the router may eliminate this threat while rebooting the router may reduce the risk, if only temporarily.  If any businesses are using the routers on the list, the router should not simply be updated, but should be replaced with a business-class solution.  Routers are what connect your network to the Internet, and as such, they should be providing strong firewall and cybersecurity features for businesses. Read More >

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Ask the right questions about your IT strategy

IT STRATEGY

Most businesses approach technology as an evolving challenge. You don’t want to overspend on bells and whistles you’ll never fully use, but you also don’t want to get left behind as competitors use the latest tech tools to operate more nimbly.

To refine your IT strategy over time, you’ve got to regularly reassess your operations and ask the right questions. Here are a few to consider:

Are we bogged down by outdated tech? More advanced analytical software can eliminate many time-consuming, repeatable tasks. Systems based on paper files and handwritten notes are obviously ripe for an upgrade, but even traditional digital spreadsheets aren’t as powerful as they used to be. Read More >

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Can you deduct business travel when it’s combined with a vacation?

Business Travel Deductions:

At this time of year, a summer vacation is on many people’s minds. If you travel for business, combining a business trip with a vacation to offset some of the cost with a tax deduction can sound appealing. But tread carefully, or you might not be eligible for the deduction you’re expecting.

General rules
Business travel expenses are potentially deductible if the travel is within the United States and the expenses are “ordinary and necessary” and directly related to the business. (Foreign travel expenses may also be deductible, but stricter rules apply than are discussed here.) Read More >

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Provide for your spouse, then your kids, with a QTIP trust

QTIP Trust

If you want to preserve as much wealth as possible for your children, but you leave property to your spouse outright, there’s no guarantee your objective will be met. This may be a concern if your spouse has poor money management skills or if you two don’t see eye to eye on how assets should be distributed to your children. In both of these situations, a properly designed Qualified Terminable Interest Property (QTIP) trust may be the answer.

How does it work?
A QTIP trust provides your spouse with income for life while preserving the trust principal for your children. By appointing a qualified trustee, you can have greater confidence that the assets will be invested and managed wisely. And the trust documents will ensure that, upon your spouse’s death, the trust assets will be distributed to your children according to your wishes. Read More >

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Are Spammers Forging Email From Your Company?

Fraudulent Email in Business

Have you ever been contacted by a customer, vendor or other business associate asking the question “Did you send me this email?”  As a cybersecurity professional, I applaud people who take this step to verify fraudulent emails before acting on them.

Do not be alarmed, upset, or embarrassed if you receive such a question.  Email is inherently forgeable.  Anyone can register an email address and fake the sender’s name.  For example, anyone can set up an email address “joker123@gmail.com” or something similar, and fill out the new user form stating their name is “Bill Gates”, even when it is not their name.

Once a forged email address is set up, one simply has to craft an email that tricks the recipient into disclosing information or clicking on a malicious web site link.  If the fraudster has even one copy of a legitimate email from Bill Gates, in this example, the faked email can be made all the more convincing, complete with email signature and fonts that match legitimate email. Read More >

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3 ways to supercharge your supervisors

Empower Managers.

The attitudes and behaviors of your people managers play a critical role in your company’s success. When your managers are putting forth their best effort, the more likely it is that you’ll, in turn, get the best performances out of the rest of your employees. Here are three ways to empower managers – supercharge your supervisors: Read More >