Having a staff on payroll can seem very commonplace as well as essential to running a small business, but many owners get in trouble with Uncle Sam because they don’t understand the complexity of payroll tax law. On the flipside, by not fully understanding the rules, it’s also common for business owners to overlook ways to manipulate employee pay to save money.
With that said, here are a few tips
for business owners to keep their payroll on track and in compliance with the
IRS:
1. Make sure that you properly classify your workers. Just because a worker
agrees to be paid as an independent contractor doesn’t mean it’s the legal way
of paying that person. If the worker performs the same services as offered by
your business, the person must usually be classified as an employee.
2. You will need an employer
identification number (EIN) and you will need to supply this number to your
payroll-processing company. If your business entity is a partnership or corporation,
you already have a number. If you do not have an EIN, contact the IRS at
1-800-829-4933 to apply for one.
