Operating a business with employees in North Carolina means handling payroll taxes and deductions no matter if you’re located in Charlotte or Concord, NC. State and federal payroll taxes need to be paid so employees can get credited for their contributions to FICA and state income taxes. Business owners have to run payroll software and make sure that the amounts are accurate. They also have to remit payments to the IRS and the state on a recurring basis. It’s a lot of work even with payroll software. Having a Charlotte, NC business accountant take over your payroll gives you one less thing to worry about. Here’s how.
Set Up the Appropriate FICA Payment Schedule With the IRS
The IRS has two deposit schedules: monthly and semi-weekly. How frequently you pay is based on your total tax liability you reported to the IRS through something known as a lookback period for the previous year of filing taxes. If you’re new to filing FICA taxes, you pay semi-weekly or monthly depending on the total amounts you remitted every quarter. Reporting less than $50,000 in taxes for the full year makes you a monthly depositor, and reporting more than $50,000 makes you a semi-weekly depositor.
The rules for payment frequency are very straightforward, but you need to be on the correct schedule to avoid penalties and fines. A Charlotte, NC, business CPA can advise you on which payment schedule is the correct one.
Remind You to Put Money Aside for FICA
The IRS requires all business owners to use the Electronic Federal Tax Payment System, or EFTPS, to make federal tax deposits. You cannot use a check to pay taxes for payroll. Instead, you have to attach a bank account to your EFTPS account for remittance and log into submit the taxes by the due-by date or risk penalty. It’s another task that requires time and money management which is something that a Charlotte, NC, business accountant can take care of on your behalf. The CPA tracks the taxes that are owed and reminds you to have the funds available before they’re due.
Making Payments On-Time and Avoid Penalties
Simply put, you do not want to get into trouble with the IRS when it comes to missing payments of any kind. Payroll taxes are especially sensitive because most of the money going to the IRS belongs to the employees. Your contribution to Social Security taxes must also be paid when you remit FICA taxes. The IRS does not allow a grace period for late payments whatsoever. If you file 1 to 5 days late, you may be assessed a 2% late fee, and up to 10% if payment is more than 16 days overdue. In the event you do not report or pay FICA taxes, you and the company officers may be held personally liable for the total taxes.
This is something a business CPA is aware of the penalties of failure to comply and will keep you in compliance with the IRS. Paying the taxes is something you have to do and a CPA can relieve you of the burden and concern of staying in compliance with the IRS.
Reporting Employment Taxes
Unfortunately, paying the FICA taxes is not reporting them as far as the IRS is concerned. You still have to file forms 940, 941, and 944 via paper form mailed to the IRS or e-file. All the information entered into these forms has to match the amounts remitted to the IRS for each employee. Accuracy is important as well as filing in a timely manner in order to avoid problems for the employees when they go to file their taxes. This is something a North Carolina business accountant can handle on your behalf so you don’t have to worry about getting into trouble with the IRS for incorrect reporting.
The IRS has a lot of requirements for reporting and payment of payroll taxes by business owners. Failure to comply can incur severe penalties. Let a Charlotte, NC, business accountant take care of the payroll and keep you out of trouble with the IRS.