Running a small business is like balancing seventeen spinning plates on poles – and tax season adds a few more wobbly ones to the mix. Payroll tax compliance wasn’t what you were thinking of when you dreamt of your own business, but now it’s something you have to look into. Not only does tax season mean filing your personal taxes, but now you’re responsible for the taxes of your growing business too.
Don’t worry; we’re here to simplify things for you.
What is Payroll Tax Compliance?
The more employees you have on your payroll, the larger task payroll tax compliance becomes (hence the name). Employers are responsible for withholding taxes from employees’ paychecks. This includes federal income taxes, Medicare taxes, and Social Security (in addition to Social Security and Medicare taxes on behalf of your employee).
Correctly tracking your employees’ hours and wages, along with proper categorization of your employees, is key to ensuring your business is adhering to payroll tax compliance laws during tax season. You’ll have to look at your employee’s W-2 or W-4 forms for the information you need.
Why Is Payroll Tax Compliance Important?
Imagine the gears of your business running smoothly, new profits are streaming in, and your employees are growing in their roles. The dream you had has manifested into a well-oiled machine. Then the tax audit comes with severe fines in tow.
Let’s avoid this, shall we? Here are some common issues that can bring financial burdens on your business:
Do you have a few in-house coordinators for a team of contractors? Those contractors are going to need different forms (1099s) vs. your in-house salaried employees (W-2s). Not designating the people that work for you in the correct category can land you in violation of wage laws and I-9 tax codes. Plus, making sure everyone on your payroll is properly classified can be financially beneficial beyond just taxes.
Taxes are top of mind because it’s tax season, but depending on the type of business you run, taxes may (and probably will) need filing far more than once a year. Local and state taxes add to that complication with requirements based on where your business is located.
This means not only will you be fined for late federal payroll tax reporting, but also for not properly filing monthly and quarterly reporting based on the state of your business.
When you have to keep track of each individual wage, expense, invoice, and tax withholding on top of local and state regulations, mistakes become easier to make. If there aren’t proper records, your business becomes more vulnerable to possible audits.
Finding One Easy Solution
All of this sounds like more and more spinning plates to keep balanced than you ever expected. How will you have time for other business priorities while keeping track of all the variables that go into payroll tax compliance?
Make tax season easier with one solution for everything: automation with Time Tracker.
TimeTracker by eBillity takes every one of these variables into consideration and automates them for you.
Keep employees hours and wages properly logged at all times as everyone on your payroll can clock in and out from their phones.
Worried about expenses and invoices being over-reported? Time Tracker keeps tabs on every single one of those too. Never wonder where the business’ finances are going again or if they were reported correctly.
And if you’re worried about having to get new software to make Time Tracker work for you during tax season, worry no more. The tool syncs with software that you are already using.
Like we said before – payroll tax compliance is important, and finding a solution for automating all of it is a big decision. You’re a smart business owner that wants smart solutions. Try TimeTracker for free first with a two-week free trial – no credit card required.