Let us say you are a new business owner with several employees. You try to follow the IRS’s guidelines concerning timely payroll deposits.
You do your best to absorb pertinent information, but you grow concerned about making payroll mistakes. Here are three errors to avoid.
Delay in running payroll
Never let payday slide. Your employees expect consistent paydays, so you must process your payroll on time. If you run late, you are likely to hurry through the process, which increases the risk of underpaying or overpaying an employee, thus causing mistakes that will cost you precious time to correct and the possibility of having to pay a fine.
Calculating overtime incorrectly
To comply with the regulations set by the Fair Labor Standards Act, you must pay employees a premium for overtime work. Since you must follow both local and state wage and hour laws, calculating overtime may not be as easy as you think. The FLSA offers a guide that helps you understand Georgia rules.
Falling behind on filing
You may make payroll tax deposits monthly or biweekly, so you need to stay abreast of the requirements for your business, follow the guidelines and submit your deposits on time. The IRS has a penalty system that applies to late deposits. It begins with a 2 percent penalty for deposits one to five days late. If your deposit is more than 15 days late, you can expect a penalty of 10 percent.
Payroll tax problems are not limited to new business ventures. They can happen to companies of all sizes, some of which have existed for many years. There can be a number of reasons behind the failure to pay payroll taxes on time, including a company’s severe financial reversals. There are legal options to explore when you need help with a compliance issue, but you must act without delay if you are to mitigate IRS penalties.