Are you a small or mid-sized business holder? Or an entrepreneur?? You should take a gaze upon the frequent payroll & bookkeeping mistakes. Suppose if you present the gift card to the business employee’s & reckon them as a cash payment. Are you sure that you have a fast and easy payoff system for the taxes whilst you overpaid the employee’s?
It might be possible that you are using the vendor payments as payroll before receiving the Form W-9? If you don’t, then IRS would probably penalize you with some serious fines. Now read this technical article to avail complete insight on this topic.
Avoid 11 Common Payroll & Bookkeeping Mistakes
Avoid these 11 common payroll and bookkeeping problems that small company holders tend to make.
1. Failure to Issue Form 1099 Correctly
Be sure that the Form 1099 be supposed to be issued only to self-governing or independent contractors & also to the vendors who endow the business with over $600 in services. If you are failing to do so, you could tend to steep penalties.
2. Classify Employees as Independent Contractors
Your staff-member may be usually either independent or self governing contractors or employees. Selecting the correct classification is essential. Different forms are involved (1099 versus W-2), & some staff may be subject to tax preservation.
3. Proper Fringe Benefit Value Not Included Appropriately
You can take account of company cars, spousal travel, country club dues, and also housing benefits into the Taxable Fringe benefits. But it can be complicated to analyze fringe benefit value accurately.
4. If You Are not Including the Fair Market Value of Prizes, Gift Cards, and Awards in Employee Income Totals
The majority awards are noticed as a taxable fringe benefit & the Gift cards are identified as cash should be assumed as a taxable wages.
5. Excluding Travel and Commuting from Employee Income
In numerous cases, commuting & travel expenditures are not measured as taxable income for an worker. But there are a number of unique cases such as travel expenses for short-term coursework that lengthen can be subject to income tax.
6. If You Are Doing It All Alone
There is a crisis with Small business owners & entrepreneurs. They at all times struggle to deal with payroll tasks on their own. But they end up experiencing more pressure, stress, and may make costly errors.
7. Exclude Reimbursements for Expenses from Re-portable Wages
The correct exclusion of reimbursements for expenses depends upon an accountable plan where operating cost are reimbursed. Only if there is a business relationship, other reimbursements should be built-in in the taxable salary.
8. Executive Income is Not Including in Non-qualified Deferred Compensation
Here is the thing that may be Executive compensation is a subject matter to an excise tax. You be familiar that if this is neglected, there is a relief program. But only certain oversights are eligible.
9. Neglect Backup Withholding for Vendor Payments
You probably know this very well that a company pays the vendor before receiving the Form W-9 (Request for Taxpayer Identification Number and Certification). It could be subject of matter to a payment of 28 percent for backup withholding.
10. Not Depositing Withheld Taxes in a Timely Manner
Withheld taxes suppose to be deposited in regular payment terms of semi-weekly or monthly basis. However, some amounts need a deposit on the next business day. If you are unable to deposit it appropriately..! This can tends to late fee deposits, penalties, and also interest charges ranging from two to 15 percent.
11. Thinking your way through the task
Entrepreneurs will as a whole theory their way via accounting when they aren’t entirely specific what they’re doing. The problem is mystery mixes after time, potentially leaving a year of books that you have to fix at evaluation time.
Few Examples include:
- Not categorizing costs properly
- Overlooking tax deductions
- Missing filing on declaring target dates since guides weren’t done in a timely manner
In case, you are also facing some unnecessary penalties from the IRS – you should Hire a professional bookkeeping service to handle your business payroll tax concerns and reporting..! Because the bookkeeping services give you a tension-less accounting experience and also help you to grow your business.
Our Certified accountant and bookkeepers are ready there to help you out in your accounting and payroll related problems. We have covered a large area in all over the USA and other countries.
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