According to the U.S. Small Business Administrators, small businesses account for more than half, or 54 percent, of all U.S. businesses. What’s more, an estimated 55 percent of U.S. employees work at one of the 28 million small U.S. businesses. The vast majority of small business owners work hard to ensure for the profitability of their companies and prosperity of their employees. In doing so, they must also ensure that they are compliant with the varied and complex business and tax-related laws, regulations and restrictions.
Depending on the size and scope of the company, a small business owner may be forced to wear many hats. From service and product developer and marketer to accountant and tax-planner; the sheer amount of duties that some small business owners take on is truly remarkable. That’s not to say, however, that some don’t make mistakes and, when it comes to the Internal Revenue Service, a defense of ‘I just have too much on my plate’ doesn’t go very far.
In addition to business-related taxes, small business owners with full or part-time employees are also required to pay employment taxes. Taxes that must be withheld from an employee’s paycheck include federal income, Social Security and Medicare and unemployment. These tax withholdings must be filed with the IRS on either a monthly or semi-weekly basis via the appropriate tax forms and schedules.
In cases where a small business owner fails to withhold or pay the proper amount of taxes or uses the withheld tax funds for some other purpose, he or she is likely to face fines, penalties and potentially criminal charges. Due to the fact that employment taxes can be complex, small business owners are advised to hire a financial professional.
Source: IRS.gov, “Employment Taxes,” Oct. 16, 2015