You may have mastered your personal taxes, but when it comes to taxes for your business, it can be a whole different story. Not only do you have to take care of taxes for your business account, but you must also know the correct forms and filing for when your business begins to grow.
Being self-employed with only yourself to be concerned about differs from what’s necessary when you add employees on to your payroll. Approximately one-third of small- to medium-sized businesses run into tax problems for not doing their payroll correctly. If you don’t want to enter into that statistic, here are four must haves to keep in mind when starting your new venture.
#1: Tax information. When you begin a business and are ready to set up payroll, you first must have an EIN or employee identification number, a separate business bank account, and workers’ compensation insurance. Additionally, when your business grows to more than 50 employees, you are obligated to provide health care coverage.
#2: Employee classification. You must properly classify your employees and match their filing information accordingly. For example, a contractor and an employee are two different categories and you need to know what differentiates one from the other. If you have any questions at all about this hiring technicality, speak to a professional in order to avoid paying fines later.
#3: Calculate withholdings. There is a certain amount you have to withhold to meet the standard federal, state, and FICA taxes. The IRS has tax brackets that can help you calculate the correct amounts, but again, a tax professional is the best way to go. Also, decide the payroll period and how tax plays into your selection. Take advantage of the start-up assistance available to you, so you don’t have to navigate a new business on your own.
#4: Keep accurate records. Trying to play catch up at the end of the year, or even a few months down the road, isn’t ideal. In the midst of you trying to operate a business, the paperwork and tax necessities aren’t factors that you will have a lot of time to devote to every day. Make sure you start out with a system or tax software program that works well and keep track of all the tax information you have on file for both your business and your employees. The more organized you are, the better it will be.
Often small business owners will say, “If I only knew then what I know now…” You learn different things along the way when starting a new business. There have been others in your shoes that can help give tips and guide you to useful resources when starting out.
Don’t worry if you’ve incorrectly calculated your payroll tax. There is assistance readily available. Tax debt relief services can help resolve payroll tax problems and assist in preventing issues like these from occurring in the future.
You don’t have to become concerned with handling everything yourself. There is a reason that people are experts in different industries. By allowing professionals to help in the areas you are new at, you can learn different parts of business without sacrificing setbacks.