PAYING YOUR TAXES IS A PHONE CALL AWAY
What a pain payroll taxes are! You need to withhold them from your employee. Youmust match the employee's social security and Medicare taxes from your own funds. Calculate how much you need to pay to the IRS. Fill in IRS Form 8109 and your bank's internal control slip. Cut a check. Travel to the bank with the slips and check (and hope you didn't forget to bring Form 8109). Stand in line at the teller window. Chit-chat with the teller. Get your receipt. Meet your nosy neighbor on the way out of the bank and listen to a ten-minute description of the problems they had getting their driveway sealed. Finally you get back to the office and find out you missed that phone call you were waiting for. Of course you can delegate some of these tasks (especially talking with the nosy neighbor) but you pay if your employee is late.
My first suggestion is to hire a payroll service. Often the cost of the service for a year is less than the payroll tax penalty on one late payment. Give me a call (978-486-9855) or an email for a couple of companies which do payroll.
My second suggestion is to pay the taxes electronically by phone. The IRS has a quick and easy program for debiting your checking account for the payment of all your IRS taxes (it doesn't work for withheld state taxes or state unemployment taxes). The program is required for larger employers but is optional and encouraged for small employers. This is how it works:
- Withhold the taxes from your employees.
- Calculate your matching taxes.
- Calculate the total taxes due the IRS.
- Complete a single page form, which summarizes the transaction.
- Using a touch tone phone call the IRS on an 800 number. The prompts in the system follow the form completed in step four. You are given an opportunity to verify the data before making it official.
- Get a confirmation number from the IRS.
- Hang up.
- Make sure you have enough money in your account to cover the taxes.
Some advantages to using the system:
- It's quick and easy (once you've done it a couple of times.)
- You can call the IRS on the first and have them debit your account on any day you wish. (Just don't forget the due date--they still penalize you if you miss the date.)
- You get a confirmation number in case something goes wrong.
- You can make the phone call at midnight.
- You are less likely to miss the deadline because you do the whole thing at once rather than calculating on the first and forgetting to go to the bank on the 15th. (I admit, once or twice, especially during tax season, I was standing in line at 3:55 on the fifteenth because I'd forgotten about paying them until the last minute.)
- You don't find out about your neighbor's weeklong bout with the flu.
Disadvantages:
- You have to give the IRS your checking account number.
- Saves them some time if they feel the need to levy your account. Of course they have your checking account number if you have ever sent them a check. If you are especially paranoid you can set up a separate checking account for this purpose.
- You don't find out about your neighbor's weeklong bout with the flu.
I have been paying my taxes this way for a couple of years and love the program. It takes me less than five minutes (because I use QuickbooksTM accounting software) from start to finish and oftentimes I am doing it in the evening. I haven't even come close to missing a deadline.
Of course the IRS has a form for signing up for this program and a whole package of mostly useless and unintelligible information after you have signed up. Give me a call (978-486-9855) or an email for the form or more information. The information above provides general information, which might be useful to you. It is not intended to replace the advice of your financial or legal advisors.
Do you have any burning business or Quickbooks questions?
Email them to me. If possible I will respond or I might use them for a future addition to my website.