Posts Tagged ‘Taxes’
Common Tax Questions
There are three types of payroll taxes:
1. Income taxes: Withhold the proper amount of income tax from the salary of each employee throughout the year.
2. Social Security tax and Medicare or “FICA” Retain the FICA tax must pay each employee his salary and match that amount.
3. Federal unemployment tax or FUTA “This tax goes to the Unemployment Insurance system, and is paid entirely by the employer. Employees must not remove any of FUTA.
* Always pay the payroll taxes in full and on time. If not, the IRS will add interest and fines, which can grow rapidly if not canceled soon, endangering their business.
* Correctly classify their workers. Workers are usually classified as regular employees or independent contractors. Business owners have obligations for payroll tax withholding and reporting to all its employees, but do not have to withhold taxes or make payroll contributions for independent contractors.
( Classify someone as an independent contractor saves time in meeting the requirements of declarations required by the SRI. It also saves you money (from 20% to 40% per person) because you will not pay its portion of FICA contributions on and not have to pay Unemployment Insurance.
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Five Ways to Pay Less Taxes
1. Submit your application for income tax on time or obtain an extension. Otherwise, you risk to be charged interest and penalties for late filing. You also lose the opportunity to take advantage of certain tax options that are presented in the income statement filed on time.
2. Use retirement plans not only for their retirement needs, but also to reduce your current taxes. If you have not established a retirement plan, consider a Keogh plan, SEP, or SIMPLE, to save more money on a tax-deductible basis than is normally possible with an IRA. Contact a financial advisor to establish a retirement plan.
3. Bring order the books and records and take them your business records separate from personal expenses. Keep records so you can keep track of expenses large and small. Small expenses can add up to significant costs. Keep these business records for the time needed, generally at least three years after the date you filed your income statement. If possible, keep their records longer.
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