I was just reading this article about what happens when you don’t keep up your tax obligations. If you’re an entrepreneurs and especially if you are thinking of setting up payroll, it’s required reading for sure.
One of the skills that most people don’t have is bookkeeping. Oh they can pay bills and follow up on invoices to get those payments, but payroll taxes and understanding the filing requirements and tax laws is beyond them (and most people don’t want to track tax law). There’s nothing wrong with that.
As an entrepreneur you don’t have to be a genius about taxes or payroll to do it right.
He recommends having a bookkeeper or bookkeeping company and I agree. Beyond that I recommend having a bookkeeper and a CPA or Enrolled Agent (EA). At minimum I recommend having a professional help you set up your books and systems so that you’re getting a good start. Even the smallest companies can benefit from having quarterly accounting services to make sure that they’re on track.
A CPA is a Certified Public Accountant. It means that they are accountants who have passed the certification exam and do continuing education every year in order to keep their certification They, along with EA’s, have a contract with the government which means that they have a responsibility to you and to the IRS. They can represent you in front of the IRS and have a burden of responsibility concerning getting your taxes right (based on the information you provide). Others, including bookkeepers, do not. That’s one of the main reasons I don’t do taxes and one of the main reasons that you ought to consider hiring such a professional to do that very important yearly task.
If you are involved in a company that does payroll or are an entrepreneur without a bookkeeper or accounting professional, it’s a must read.
Remember: not understanding the tax law is no excuse in front of the IRS!