1.) Wasting Time that Could Be Better Utilized
One of the biggest mistakes that small business owners and self-employed people make, which could eventually cost them their entire business, is trying to do everything themselves rather than outsourcing work to qualified professionals. The time you spend on payroll and tax reporting would likely be better spent on your core priorities: growing your business and performing your job. The potential revenue and opportunities you may be missing out on while you are managing administrative tasks could be substantial, and often are far more valuable than the small amount of cash you are saving by not hiring a professional to manage your payroll.
2.) Misclassifying Employees
To avoid the extra costs of taking on employees, such as the costs associated with Social Security, Workers’ Compensation and State Unemployment Insurance, many businesses are misclassifying their ‘employees’ as independent contractors. This can result in costly and time-consuming audits, penalties and fines and potential jail time, and is a situation that the IRS is paying close attention to.
3.) Forgetting To File Forms or Missing Important Deadlines
If you forget to file forms or miss important deadlines to file or pay taxes, this can easily be more expensive then the cost of payroll service. The penalties for late payments or mistakes are very steep. Trust fund tax means it’s not your money, not your tax, but rather the employee’s money that you are responsible to pass along.