Tax Penalties Your Small Business Should Watch Out for—Part 2
Last Updated April 14, 2023
In this blog series, we are discussing different tax penalties that any small business can be subjected to particularly if it is not working with an experienced tax preparation firm. In the last blog, we have talked about late filing, undervalued and form 1099-related penalties. Here, we will extend our discussion to some more tax penalties.
Table of Contents
Form W2 Slip-ups
Every business regardless of its size has to file an individual tax return of each its employee through form W2. It helps the IRS in streamlining the revenue inflow. Even if you are registered as a small business, you can’t get away with the non-filing of W2 forms.
Also, if you make any mistake in the form filling, then the IRS has the right to impose a fine. For that matter, always work with any tax preparation firm even if you operate on a small scale. There are some tax preparation and online bookkeeping firms that offer their services to small businesses in a nominal amount. They can take care of your entire form W2 bulge.
Fines Mount with Time
The late submission of form W2 is penalized through a different amount. For instance, you have to pay $50 for every form even if you submit it within the 30 days of the deadline. The penalty amount drastically increases with time. The non-filing of W2 forms of even a handful of employees can cost you thousands of dollars in penalties. By availing any cost-effective online tax preparation firm, you can sort out form W2 filing once and for all.
Trust Fund Recovery Penalty
Whether you are an LLC or a partnership, it’s your responsibility as an employer to deposit the tax withholdings of your staffer with the US Treasury. In case of non-payment, you have to pay the same amount as the trust fund tax in the penalty—this is some hefty fine.
In order to avoid paying double the amount of your trust fund tax, make sure you are working with some trustworthy online bookkeeping firm. And also double-check with them if these deposits have been made.
Penalty for the Violation of the Affordable Care Act
If your business is registered as a corporation, then you have to provide health coverage to your full-time employees, as prescribed in the Affordable Care Act. Otherwise, you may be subjected to penalties. Keep on working with any expert bookkeeping and tax preparation firm to know if your business is subjected to this compliance.
You can read the first part related to this article here. while In the third and final part of this series of posts, we will look at some more tax penalties that businesses should avoid when you click here.
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