Small Business Tax Obligations That You Should Know

Small Business Tax Obligations That You Should Know

There are several small business tax obligations exist. This article will discuss the payroll tax forms you’ll need, due dates, and penalties for failure to pay. It will also discuss the number of exemptions you can claim for each employee.


Due dates

For a small business, keeping track of due dates is essential to keep the books in order. Whether you file payroll taxes monthly or annually, it’s important to note when deadlines are approaching. The IRS will likely impose financial penalties if you miss them. So consider using a calendar for small business payroll taxes to avoid costly mistakes.

Payroll taxes for small business are due on specific dates, depending on your payroll type. Some are due monthly, while others are due every two weeks or semi-weekly. 

Generally, taxes for small businesses are due on March 15 each year, but in some cases, the IRS may move the date to the following day if the original due date falls on a weekend or holiday. The IRS is often upfront about these changes, but national emergencies can push dates back months or weeks.

Penalties for failure to pay

A small business can face several penalties for failing to pay payroll taxes. The punishment can range from a few hundred to ten thousand dollars depending on the amount owed. In addition, interest will accrue from the date the taxes are due. Furthermore, a portion of each employee’s paycheck is withheld to cover payroll taxes, known as trust fund taxes. Finally, the IRS can file a federal tax lien against the business’ assets upon failure to pay payroll taxes. This lien is a public record and serves as collateral for any future debts owed.

When a business fails to pay payroll taxes, the IRS can shut down the business and instruct customers to send money to the IRS to cover the taxes. Moreover, failure to pay payroll taxes is a federal crime and can be prosecuted, resulting in a fine and, in some cases, prison time.

Number of exemptions claimed by the employee.

There are several ways to calculate the number of exemptions an employee may claim in small business payroll taxes. For example, the employee may claim too many exemptions, or the employee may have misstated information on the employee’s W-4 form. These errors can result in the employer owing more money than necessary.

Personal exemptions and deductions are subtracted from employees’ gross pay when they file annual tax returns. The more exemptions they claim, the less tax will be deducted from an employee’s paycheck. Each of these exclusions exempts from withholding a certain amount of money from wages.

Small businesses may also be eligible to claim payroll tax credits when conducting research. 

Sales Tax Collection

Most items and services delivered to a consumer in a state where your firm has a physical presence should be subject to sales tax collection, reporting, and payment. But there are differences in sales tax laws and rates from one state to another and from one city or county to another. Go online and look for your state’s department of revenue or taxation to find the sales and use tax rates for your locality.

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