Each week, your employees fill out time sheets, punch the clock or log in to record the hours they work. You or someone you hired keeps track of those hours, calculates the pay for each employee and issues a weekly check or deposit for the total amount, minus payroll taxes. The person responsible for managing payroll then submits the payroll taxes to the Internal Revenue Service. At least, that's what is supposed to happen.
Summer jobs are a great way to generate income for college and a substantial learning experience for high school and college students. The Bureau of Labor Statistics says that last July, more than 20 million people between the ages of 16 and 24 were employed. Sole proprietors, and married couples who run a family business as the only partners of the entity, frequently hire their own children during the summer (and often year-round) to keep income in the family.
Running a business often involves deciding what bills to pay - and when to pay them. Peaks and valleys in business are common in any industry. For instance, the change in the price of gas can impact a company in many ways -- from increased costs in obtaining supplies to a downturn in business as consumers cut back on spending. It is often tempting to delay paying bills when unexpected shortfall in revenues arises.
Unfiled or unpaid business or payroll taxes can create serious problems. Depending on how the business is set up, the IRS can and will pursue the owners or managers personally for the employee share of the taxes withheld by the company and not sent to the government. Even the company bookkeeper can be held personally responsible for unpaid payroll taxes. These are called "Trust Fund Recovery Penalties" and can never be discharged in bankruptcy. If a company has received notices from the IRS regarding: