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15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

The Importance of Accurately Reporting Payroll Taxes

Why is it so important to businesses, large and small, that accounting payroll taxes is done accurately? In order to answer this question, it is first necessary to explain what a payroll tax really is. These taxes are the ones that employers commonly without from their employees’ paychecks. The taxes are then paid, on the employee’s behalf, to the appropriate tax agencies. The taxes are based on the amount of the employees’ wages and are calculated at a percentage.

Employers are responsible to send the correct amount of taxes to the correct local, state, and federal tax agencies. This is true for corporations with thousands of employees and for small mom-and-pop businesses. Every employer has a legal obligation to comply with tax regulations. This is why correctly accounting payroll taxes is so important.

In order to be sure that information is turned in accurately and correctly, pay attention to the following tips:

1.       Obtain an Employer Identification Number (EIN)

If you haven’t already done so, you’ll need to contact the IRS in order to get this number. It may sometimes be referred to as an Employer Tax ID. The number will be used to report taxes to the U.S. Department of the Treasury. It might also be necessary to report other information to this agency or to state tax agencies.

2.       Report Payroll Taxes on Time

There are different reporting obligations for the various agencies. Sometimes you will report on a quarterly basis while other circumstances call for annual reporting. The IRS provides an Employer’s Tax Guide in order to clarify federal tax filing laws. Look for similar reports from local and state agencies.

 3.       Establish a Good Organizational System

Small steps such as setting a pay period and storing employees’ federal forms can save you a lot of headaches. Tracking paid time off, sick pay, hours worked, and any additional payroll deductions can be confusing, but will need to be considered and planned in order to accurate file tax records.

When it comes to accounting payroll taxes, good organization and attention to detail will pay off. Some business owners are able to handle the accounting themselves, but many others choose to hire a professional for these services. Remember, however, that in the end, you, as the business owner, will be held responsible for the accuracy of these records.