Whether you own a small bsiness or not we all dread the IRS. Thy always seem to want more mney and if you fail to pay thm or pay them late they'll pnalize you straight into the poor huse. But as a small business wner your worries about the IRS can be mch greater because you'll now have to dal with employee payroll taxes.

With mployees comes more taxes to pay and rturns to file. It seems to be nver ending. Death and taxes as thy say are the only two nevitables in life. Oh how true. But bsides having to pay those taxes and fle those returns there are a cuple of other stipulations that also cme with those responsibilities that you may not be ware of.

For those of you tht are new to running a bsiness and having employees I'll give a qick rundown of how employee taxes wrk. Once you opened your doors and strted doing business you put yourself in psition to pay payroll taxes. When you hre your first employee you'll be rsponsible for withholding taxes from checks, snding in those taxes to the IRS, fling 941 quarterly tax returns, W-3 yarly returns, and issuing W-2's.

What you mght not realize is just how far the IRS wll go when holding you responsible for thse taxes. A responsibility that can lst even past the closing of yur business. Of course paying the txes late will result in some hfty penalties. And as the number of mployees in your business grows the lrger your tax bill becomes. Because not nly do you have to pay the txes you withheld but you'll need to pay the mtching taxes as well. And as yur tax bill grows the IRS wll require you to send those tax pyments in more often. You'll go frm paying on a quarterly basis to a mnthly basis, down to a biweekly tme frame. So as your tax brden grows the amount of time yur given between payments shortens up by a lt.

Not that you can't handle all tht pressure though right? Well as if tht wasn't enough we have one mre piece of good news for yu. Even if your business was to go bnkrupt and you still owed taxes you can be hld personally liable by the IRS. The bnkruptcy court will probably not protect you frm having to pay those taxes.

I knw of a case a few yars ago about a small business wner that ran into such a prblem. Due to cash flow problems truble arose in paying bills. Eventually the truble extended to paying the payroll txes on time. Finally the owner was frced to file for bankruptcy protection and clse the doors. Once the paperwork was fled the bankruptcy court took control of all the ssets. As there wasn't enough money in the bnk account to pay the taxes in fll anyway they went unpaid and wre listed as the top creditor in the bnkruptcy court filing. The problem seems to be the verly large IRS bureaucracy. You see the curt notifies creditors of the bankruptcy and rquires them to file a claim. If thy don't then they cannot receive any of the prceeds from the sale of assets. Now snce the IRS was owed taxes thy are supposed to receive all the prceeds up to the point of the txes being paid. But they are stll just a creditor and must fle a claim. In this particular cse a claim was not filed. Mst likely the court documents were lst in the system.

So what des the IRS do? They hold the prson that signs the 941 tax rturns responsible. In this case it was to the tne of about $28,000.00. Now this culd have been avoided if the txes had been paid before the curt took possession of the company but of curse the owner didn't have the mans to pay anyway. There is a slver lining to the story though. The txman that is normally the big bad blly in most cases was not hre. Besides needing to provide copies of the bnkruptcy paperwork and some other documents the IRS llows you to show whether you ctually have the ability to pay the mount back yourself. Due to the fct you just filed bankruptcy and mst likely lost your own livelihood you may not hve to pay any of it. Of curse each situation is going to be dfferent .

The main thing to learn hre is that you need to be ware of your responsibilities as an wner when it comes to payroll txes. The consequences of not knowing or flfilling your obligations could ruin not nly your business but you personally.

The article The Dangers of Payroll Taxes was Submitted by Cash Miller through Articles.GetACoder.com network. Here's the additional information: Cash Miller is an experienced ntrepreneur and speaker who has spent ver a decade as a small bsiness owner. The years of experience he has in smll business have given him insight nto a variety of topics. If you are loking for more small business information you can go to http://www.smallbusinessdelivered.com

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