Avoid These Tax Blunders
Don't get in over your head with these common mistakes.
Small businesses often get in trouble over payroll taxes andborrowing from trust fund taxes, says Michael Savage, a 30-year taxlaw veteran and author of Don't Let the IRS Destroy Your SmallBusiness: 76 Mistakes to Avoid. "[Small-businessowners] see that large chunk of withheld social security and incometaxes sitting in their accounts for anywhere from a few days to acouple of weeks before it gets sent in to the IRS, and they'vegot bills to pay. So they say, 'Well, I'll just use thatmoney to pay the bills. When it comes time to send it into the IRS,I'll have some more money in and then I'll send it in.'And of course, when it comes time to send it in to the IRS, theydon't have it.
"The one thing the IRS makes very sure of and audits verycarefully is the payment of trust fund taxes. And what many smallbusinesspeople don't realize is that they're personallyliable for those taxes, even if their company is a corporation.They, as the owners or as the COOs of the corporation, havepersonal responsibility to get those trust fund taxes paid. And ifthey don't, the IRS can come take their home and their car andtheir kids' college education money and anything else to getthose taxes paid."