Whether you are looking to hire employees as you start your business or now need them since your business has grown, you take on certain responsibilities when you employ workers. You will need to ensure your workplace is free from discrimination and harassment, and you will need to ensure the safety of your workers.
You also take on financial responsibilities when you have employees. Payroll, benefits and taxes are the primary tasks you must address. One area where many business owners end up in trouble is with payroll taxes.
Common mistakes business owners make
You want to make sure that you do everything right, and understanding the common mistakes made when it comes to payroll taxes could help keep you out of trouble. Consider the following:
- Even if you rely on an outside service to handle your payroll, you remain responsible and liable for the payment of all taxes as far as the government is concerned. You may have legal recourse against the service, but in the meantime, the government expects you to rectify the problem and may hold you personally liable.
- The filing of your quarterly employer tax returns is a separate action from paying employment taxes. You need to make sure that you follow the rules in order to avoid repercussions.
- If you control your employees' workdays and direct them regarding doing their jobs, they are not independent contractors. You may not simply classify them as such in order to avoid payroll and other taxes, along with other benefits.
- Don't make the mistake of believing that, because certain benefits are tax free to your employees, you don't owe payroll taxes on them. For example, 401(k) contributions remain subject to FICA, even though your employees do not pay taxes on them.
- Your business' entity structure as a corporation or limited liability company will not protect you from personal liability for not making payroll tax payments.
You might be surprised how easy it is to make a mistake when it comes to payroll taxes. In order to help ensure that you do not end up at odds with the IRS or Ohio's taxing authorities, you may want to consult with an experienced tax lawyer as you become an employer. Understanding your responsibilities up front can help you avoid mistakes such as these, which, in turn, helps increase the chances your business will continue to thrive.