Just three little letters strike fear into the hearts of business owners everywhere:
I R S
But it doesn’t have to be that way. Consider these four tips for payroll compliance to stay ahead of the curve (while steering clear of penalties):
- Stay current. All businesses with a minimum of just one employee are responsible for filing payroll taxes – which include federal and state income, as well as employee and employer shares of FICA (Social Security, Medicare), unemployment, and more. Employers must regularly report wages, tips, and additional compensation to the IRS. For all intents and purposes – you are a tax collector. Congratulations. This is your season! But seriously, substantial penalties and fines may be levied as a result of noncompliance. So stay abreast of ever changing tax laws. (And thanks to the new tax bill passed by Congress last December, 2018 will be a particularly interesting year.)
- Avoid misclassification penalties. By now, you should have mailed 1099-MISC forms to all independent contractors who were paid $600 or more in 2017. The deadline to do so was Jan. 31, 2018. What constitutes an independent contractor? It’s all about control. If you dictate when, where, why, and how a job is done, then the person carrying out said job is considered your employee. Independent contractors are not subject to payroll tax withholding. Misclassifying employees can subject an employer to payroll compliance penalties involving back taxes, overtime, fines, and even criminal charges.
- Keep meticulous records. The IRS wants to be able to access your employee files whenever necessary. Where payroll is concerned, this can include copies of your W2s, expense reports, evaluations, time sheets, cancelled checks, and more. So, in short – save everything, save often, and reevaluate your filing system.
- Don’t waste resources. Do you have someone crunching numbers on site? If so, his or her time is largely wasted on filing paperwork regarding payroll compliance and/or taxes. Allow your in-house talent to take point on more pressing endeavors, and consider outsourcing payroll for those routine, yet taxing (pun intended) chores.
Maslow Media Group handles all Payroll, insurance, taxes, and compliance for our clients’ occasional and fulltime freelancers. We protect our clients from misclassification charges and fines, and adhere to all IRS rules governing workers in the television, film, and video production industries.
Questions? Contact us today and request a free quote!