27 Oct Keep on Top of Important Tax Deadlines
When you think about how many payroll forms need to be processed and filed, it’s easy to feel overwhelmed or intimidated. But if you practice organized behaviors and stay aware of your tax deadlines, you can ensure that all documents are accurately filed.
However, the possibility of facing a hefty penalty from the IRS if you make late payments or do not accurately report your numbers should incentivize you to stay on top of things.
What to do if you miss a payment
In fact, according to IRS statistics, approximately 33% of employers make mistakes when running payroll. In turn, they end up paying billions of dollars’ worth of fines each year. So, the best-case scenario is to avoid missing deadlines altogether. That said, if you discover you’ve missed a deadline, the best thing to do is act fast.
How to know when the deadlines are
Payroll administration can be a very complex process. It’s understandable if keeping up with the ever-changing laws and regulations gives you a headache, whether literally or figuratively. Despite the stress, if you are the payroll administrator, you need to be aware of all applicable deadlines.
You can use an IRS-offered tool calendar known as the Calendar Connector to remind yourself of federal tax deadlines. Consider initiating your tax payments via the IRS Electronic Federal Tax Payment System days before your official payment dates.
Also, even if you’re making use of a payroll processor, the IRS suggests that employers that register with the EFTPS obtain their own PIN. That PIN can be used to verify your payments. When you make your payments, double-check that you’ve indicated the proper tax period. If you choose the wrong tax period, the government might apply your payment to the wrong quarter, causing you to fall behind on your payments despite paying.
How to avoid penalties if you file late
If you end up missing deadlines and subsequently file late, there are two exceptions that you should analyze. According to the IRS, “the law allows the IRS to remove the deposit penalty if: (1) the penalty applies to the first required deposit after a required change to your frequency of deposits, and (2) you file your employment tax returns by the due date.” If either of these exceptions apply, you might be able to avoid facing penalties. In addition to that, the following practices can help you avoid payroll mistakes and the penalties that may follow.
Run relevant reports ahead of time
Give yourself enough time to manage your payroll to identify and correct any errors. Running reports well in advance gives you the time to review and fix any mistakes if necessary.
Withhold money for tax-related payments
Employment taxes are supposed to be paid on a quarterly basis. When you budget for them, you will know that you have the funds you need to make your deposits on time.
Create a payroll checklist
There are a lot of tasks to complete when running payroll. By creating a checklist, you can outline all your payroll-related tasks to help you stay on track and tackle all your responsibilities.
Automate the payroll system
When you process payroll manually, there’s a lot of room for error due to the fact that humans naturally make mistakes. However, by automating the payroll process, you can reduce the likelihood of errors occurring along the way.
Resolve payroll errors immediately
Even the most meticulous payroll management systems can make errors. But either way, it’s crucial to address mistakes as promptly as possible. This will minimize your risk of incurring additional interest or hefty fines. If you can demonstrate that the error was the result of administrative oversight rather than being something you did on purpose, you might be able to request a penalty waiver.
To streamline your operations and ensure compliance with filing deadlines and deposit requirements, you can outsource some or all of your payroll and tax responsibilities. Just make sure you offload that work to a trusted and legitimate third-party payroll service provider.
This can be a strategic move if implemented properly and responsibly. You’ll free up a lot of your time, allowing you to focus on tasks you cannot hand off to other professionals. You’ll also have reassurance in knowing that the third-party provider will diligently handle the reporting, collecting and depositing of employment taxes with both state and federal authorities on your behalf.
That said, while you may choose to outsource your payroll and tax responsibilities to a third-party service provider, it’s important to note that you are still responsible for those matters. Per the IRS, you will be at fault if your federal tax liabilities are not completed correctly.
So, in the event that the third party does not adequately fulfill its obligation, you could end up owing interest, paying large fees or facing penalties. Additionally, there is also the possibility of you dealing with personal liability for unpaid federal taxes.
All in all, make sure you cover your bases and avoid missing deadlines to the best of your abilities. Contact the IRS right away if you have any questions or concerns.
Original content by © IndustryNewsletters. All Rights Reserved. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.