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If you’re a small biz owner, you’ll probably know how painful tax bills can be. And payroll taxes can be even more excruciating. Did you know that more than 40 percent of small businesses pay an average of $845 each year as a penalty for payroll-tax-related issues?
Well, that can be quite a burden when you’re tight on funds. Are you tired of feeling that payroll taxes are draining your bank account? Fear not, boss, because you can rely on some killer tips to manage those pesky payroll taxes. We’ve got your back with a list of tried and true ones.
So let’s get started and save you loads of money, business owners!Unlock the secret to stress-free payroll tax management! Check out our latest blog post for the best payroll tax advice tailored specifically for small businesses #PayrollTax #SmallBusinessAdvice #TaxTipsClick To Tweet
Know your employee classification
With employees, you cannot take a one-size-fits-all approach when it comes to payroll. You’ll probably know that things change according to their classification. Are you properly classifying them as either W-2 employees or 1099 contractors? If not, you may face some serious penalties and fines.
Employees in the W-2 category receive benefits such as Medicare, Social Security, and Unemployment Insurance. Conversely, contractors or 1099 workers have to pay these taxes themselves. So you’ve got to understand the difference!
Payroll taxes are a real headache to calculate and withhold, right? Even if you have a small team, they can stress you out! But don’t worry – automation tech is here to help. Try up a payroll system that automatically calculates and withholds them for you.
Of course, you get to save loads of time and effort. And you can rest assured about accurately withholding the correct amounts.
Drill the details
While you can automate systems and get experts to handle the process, it’s crucial to drill the details as a business owner. For example, you’ve got to know everything about FUTA and how it can affect your final bill. What is Futa?
Federal Unemployment Tax Act is a payroll tax employers pay for unemployment benefits. You pay it quarterly and in full, which means no money goes from employee wages. Not knowing these details means you may miss out on crucial components and end up with penalties.
Claim credits and deductions
Well, the good thing is that small businesses may qualify for several credits and deductions that can reduce payroll tax expenses. The Employee Retention Credit is a refundable credit you can claim for retained employees during the pandemic.
Likewise, the Work Opportunity Tax Credit rewards businesses for hiring people from certain targeted groups, such as veterans or ex-felons. These credits and deductions can make a big difference, so take advantage of them!
Stay up-to-date on deadlines
You may do everything right, but missing out on deadlines can get you in trouble. It can lead to hefty penalties and fines. But the solution is simple- just stay on top of deadlines for filing payroll returns, making payments, and providing forms to your employees.
Set up reminders, automate these processes, and bring in experts to avoid last-minute rushes or late fees and fines.
Handling payroll taxes can be a real stress for small businesses, but you can get over the challenges. With a little bit of know-how and help, you can manage them like a pro and keep more money in your pocket. Just do it, guys!