Worse Case Scenario

Everybody has a few really bad days in his or her life. You know, car breaks down, you spill coffee on your shirt while driving to work…you get notice of a full blown audit from IRS. The first step you take should not be drinking to excess or driving for border. You have rights when IRS comes calling and one of them is particularly important.

Representation

You have right to be represented by an accountant or attorney at your audit. Under no conditions should you even consider going to an audit by yourself. Doing so would be like throwing red meat to a lion. Instead, spend money to get representation and let them handle audit. In most cases, you won’t even have to go to audit.

Nightmarish tax audits are generally a thing of past. A letter from IRS should not cause you to faint. Usually, news isn’t that bad. If it is, hire representation and let them handle it.

In general, you must deposit these taxes by check or cash to an authorized financial institution, typically your bank. Check with your tax professional to make sure you are not required to use Electronic Federal Tax Deposit System (EFTPS). Regardless of payment method, you will then report them on Form 941, Employer’s Quarterly Federal Tax Return

Federal Unemployment Tax (FUTA)

FUTA is a combined federal and state program that provides unemployment compensation to unemployed. As a business owner, you are solely responsible for paying this tax, to wit, nothing is withheld from paychecks of your employees. FUTA is determined by using Form 940, but you are encouraged to use a tax professional to determine payment amounts.

Employment taxes can be frustrating for a small business owner. They are, unfortunately, a necessary evil as your business grows.