What to do with all that payroll tax money

Opening an account just for payroll tax is a good way to ensure it never is accidentally “reallocated” to other expenses, but it also can help serve as a reminder of when to send payments to state and federal offices. Sending these funds in late can result in significant penalties, a scenario that can easily be avoided with proper scheduling. Taking a look back The first thing a company needs to do is determine its lookback period, as described by the Social Security Administration and the IRS. This time period helps come up with the regularity with which payroll taxes need to be sent in. Calculating the amount of withholdings taken in a 12-month period can be hard for a fledgling company because it has not been in operation before, so all new businesses start on a monthly remittance plan. After that, those with $50,000 or less annually will continue on a monthly schedule, but over that limit, deposits will need to be bi-weekly or more, depending on how much is being sent in.  For payroll under $2,500, that remission can be sent in with a quarterly statement. Sending in money All remission should happen by the 15th of the proceeding month for which money is being sent. In other words, July payroll deduction payment should be received by the IRS and state agencies by August 15 to avoid any penalties for late correspondence. For those with weekly checks, it will vary depending on the date at which checks are issued to employees. Saturday through Tuesday payrolls need tax payments by the next Friday, while those on Wednesday through Friday should be the proceeding Wednesday. In these cases, having a calendar or reminder schedule is vastly important to avoid delinquency. For times when this remittance date should fall on a weekend or non-banking holiday, it won’t be considered late as long as payment is made in full by the next available business day. It is up to individual entities, however, to know what their payment schedule is and send money in a timely fashion. Not knowing the rules is not an excuse when it comes to late filings and tax penalties.

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