27 July 2020

Why Businesses Get Into Trouble With Payroll Taxes

Payroll taxes are the number one reason why businesses and their owners end up in our office. The issue is why?

Given that most businesses fail due to cash-flow issues, it should not be surprising that taxes collected and withheld by the business also get spent when the business starts to struggle. Add to that most businesses start their life cycle under-capitalized, and it is easy to see why payroll tax debt can become a problem.

Payroll taxes are the easiest loan to take and the hardest to pay back. Easy because there are no loan documents to fill out or permission to ask. Just keep and spend the money. It is the hardest loan to pay back because with all the various penalties and interest, the struggling business soon finds itself in a financial hole it has no hope of getting out from.

The worst part about payroll tax debts is the personal liability to the owners and, even, certain employees. Because of the potential personal liability, not making payroll tax deposits has the potential to destroy the owner’s personal finances. Because of the devastation that can be wrought by not paying the payroll taxes, resolution of such claims makes the knowledgeable tax practitioner extremely valuable.

Jeff Roltgen, Tax Rescue CPA
Jeff@TaxRescueCPA.com
www.TaxRescueCPA.com

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