Payroll can be complicated and if you’re not careful, you could end up facing costly fines from the IRS. In fact, according the U.S. Chamber of Commerce, one out of every three businesses pays a penalty each year.
When it comes to payroll, taxes tend to cause the most confusion. Here are some common issues that could give you a major tax headache:
- If you fail to withhold the proper amount from each paycheck.
- If you fail to register as a corporation or sole proprietor with the proper government agency.
- If you don’t set up local taxes or deductions correctly.
- If you fail to update your state’s changing unemployment insurance rates.
Other areas that could lead to trouble:
- Misclassifying workers as independent contractors rather than full-time or part-time employees.
- Handwriting a check to an employee but fail to record that check in your payroll processing system.
Don’t let these common errors take you away from you do best, running your business.