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Employer payroll taxes can be a financial drag on your business, but they don't have to be. These are taxes that you, as an employer, are mandated by federal law to pay. Knowing ways to save money on your payroll taxes can help your business stay financially strong.
1. Report Payroll Accurately
It is important that you calculate each employee’s net income accurately and precisely. An employee’s net income is calculated by subtracting payroll taxes from the gross income. This calculation is one that you will need to report to the IRS and should be error-free to avoid problems or possible fees.
2. Report Payroll Taxes Honestly
Do not think that you can save money by avoiding employer payroll taxes altogether. By doing this you would find yourself in a compromised position and, basically, in trouble with the IRS. The same thing goes for employers who do account for payroll taxes but are not paying as much as they are supposed to. The IRS punishes employers who evade payroll taxes or report dishonestly with a Trust Fund Recovery Penalty. You will be required to pay back 100 percent of what you should have originally paid, plus interest.
3. Assess Your Employees
You would be wise to assess whether your employees are actually considered employees in the definition provided by the federal government, or if they could be considered independent contractors. Employers typically do not need to withhold payroll taxes for independent contractors, so making the official switch could save you money.
1. Report Payroll Accurately
It is important that you calculate each employee’s net income accurately and precisely. An employee’s net income is calculated by subtracting payroll taxes from the gross income. This calculation is one that you will need to report to the IRS and should be error-free to avoid problems or possible fees.
2. Report Payroll Taxes Honestly
Do not think that you can save money by avoiding employer payroll taxes altogether. By doing this you would find yourself in a compromised position and, basically, in trouble with the IRS. The same thing goes for employers who do account for payroll taxes but are not paying as much as they are supposed to. The IRS punishes employers who evade payroll taxes or report dishonestly with a Trust Fund Recovery Penalty. You will be required to pay back 100 percent of what you should have originally paid, plus interest.
3. Assess Your Employees
You would be wise to assess whether your employees are actually considered employees in the definition provided by the federal government, or if they could be considered independent contractors. Employers typically do not need to withhold payroll taxes for independent contractors, so making the official switch could save you money.
