This story appears in the
March 2001 issue of
Entrepreneur.
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In an effort to make life easier for small businesses, the IRS
recently scrapped monthly employment tax deposit requirements for
about 1 million small-business owners. Under the new rules, the IRS
will allow businesses to make payments every three months if they
have less than $2,500 in quarterly employment taxes. Previously,
payments were permitted every three months only if businesses had
less than $1,000 in quarterly employment taxes.
The IRS says the new rule is advantageous-it reduces the
frequency of deposits, small businesses will encounter fewer
mistakes and penalties, and quarterly payments will allow better
cash flow. Small businesses that qualify under the new rule may pay
their employment taxes when they file Form 941, "Employers
Quarterly Federal Tax Return."
Joan Szabo is a writer in Great Falls, Virginia, who has
reported on tax issues for more than 14 years.
