| It is the nightmare scenario for every business owner. | | | | spin. But the failure to get it exactly right is even |
| A letter from the IRS arrives demanding payment for | | | | scarier. |
| unpaid payroll taxes. The statement list the amount | | | | The process starts with a letter and then a phone call. |
| owed along in addition to penalties and interest. | | | | If not corrected the an IRS agent will pay you a visit. If |
| Thousands of businesses are faced with this situation | | | | they determine your business is salvageable they can |
| every day. Even worse, many of these companies | | | | work out a payment plan. If, however, they determine |
| are forced into bankruptcy every year when they are | | | | your business is failing then they can sell your assets |
| unable to make the payment demanded. | | | | to collect the money ahead of your creditors. |
| The IRS also considers the problem of unpaid payroll | | | | An even worse scenario exists. The IRS can peruse |
| taxes significant. "Payroll taxes represent a significant | | | | the business owner or the officers of the company for |
| portion of the IRS's accounts receivable," says Carolyn | | | | the unpaid taxes if it defaults. |
| Stumpf, a spokeswoman for the agency. Fines for a | | | | With such a complex system and such steep penalties |
| business that collect the taxes but fail to pay the IRS | | | | it is not surprising that so many companies are turning |
| are significant. The IRS considers this their money that | | | | to payroll services to help them navigate the payroll |
| is simply held by the business. | | | | tax maze. But what criteria should you use to find the |
| But most unpaid payroll taxes are a function of | | | | right service? |
| mistakes rather than deception. Depending on the size | | | | Liability - If there are ever mistakes will your payroll |
| or your company the time to file is quarterly, monthly | | | | company stand behind you and pay the fines or do |
| or even the day after payday. Missing the due date by | | | | you maintain the liability for any errors? You also want |
| even one day can generate a sizable fine. Knowing | | | | to make sure they have the financial security to |
| what to forms to file and when is scheduling problem | | | | backup their promises if ever needed. |
| for a business owner with a million other things they | | | | Access - How will you enter your payroll information? |
| are working on. | | | | Some services have websites or you may need to |
| Timing is not the only problem. The tax rates that must | | | | call it in to their representative. |
| be withheld are a moving target that often changes as | | | | Customer Service - If there are ever any changes |
| often as congress is in session. There are rates for | | | | you need to make how easy is it to contact the |
| Social Security and Medicare taxes that have rates | | | | service. Make sure you can get a real person on the |
| for withholding from the employee and the employer | | | | phone if that is ever needed. |
| contribution. These two taxes sum to the Federal | | | | Price - Your costs will primarily vary by how many |
| Insurance Contribution Act, FICA. | | | | employees you have and how often you run payroll. |
| Federal Unemployment Tax and Federal Income taxes | | | | Make sure you ask about any additional charges like |
| must also be collected from each employee. And that | | | | check delivery or quarterly filing. |
| is just for the federal government. There are also | | | | By getting several quotes and doing some due |
| taxes that must be collected for the state and even | | | | diligence you will be getting a good payroll service at a |
| some local governments. | | | | reasonable price. Now you can back to running your |
| The various rates, numerous schedules and countless | | | | business instead of untangling the payroll tax knot. |
| forms are enough to make a business owner's head | | | | |