Small Business Tax Errors

Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. The IRS encourages small businesses to explore using a reputable tax preparer like a certified public accountant to help with their tax situation.

Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:

Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.

Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers.  If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.

Filing late
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.

Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.     

Source: The IRS

Will You Owe Tax?

Those who need to make an estimated tax payment for 2019 should remember that the fourth quarter payment is due Wednesday, January 15, 2020.


These taxpayers will want to check to see if their 2019 federal income tax withholding will unexpectedly fall short of their tax liability for the year. They can check this by using the Tax Withholding Estimator on IRS.gov.

Before using the Tax Withholding Estimator, taxpayers should gather their most recent pay stubs and income documents from all sources. They should gather documents related to pensions, annuities, Social Security benefits and self-employment income. They should also have a copy of their 2018 federal tax return. This will help estimate 2019 income and answer other questions asked during the process.

If a taxpayer follows the recommendations at the end of the Tax Withholding Estimator and changes their withholding for 2019, they should recheck their withholding at the start of 2020. A withholding change made in 2019 may have a different full-year impact in 2020. So, if a taxpayer does not file a new Form W-4 for 2020, their withholding might be higher or lower than they intend.

Taxpayers should remember that the Tax Withholding Estimator’s results will only be as accurate as the information provided. People with more complex tax situations should not rely solely on the results of the withholding estimator. 

Source: The IRS

Final 2020 W-4 Available

The final version of the 2020 Form W-4, Employee’s Withholding Certificate (pdf) is now available on IRS.gov.

The new W-4 form better incorporates the changes ushered in by the Tax Cuts and Jobs Act allowing employees to more accurately estimate the amount of tax they ask their employers to withhold from their paychecks beginning in 2020. In addition, the goal of the new design is to balance simplicity, accuracy and privacy for employees while minimizing burden for employers and payroll processors.

A few of the visual changes that were made in the last draft shared include:

·         it is now a full page

·         there are no withholding allowances (which is why the title of the form changed to “Employee’s Withholding Certificate”)

·         steps 1 through 5 to guide employees through the form

·         instructions, worksheets, and tables follow the first page

Changes since the last draft include minor edits to verbiage, but more notably, on page 2, under “Your Privacy,” more language was added to help the taxpayer understand exactly what checking the box in step 2(c) may do to withholdings.

The IRS encourages all payroll professionals to become familiar with the new form now so that they can help employers and employees with proper withholding in 2020.

The new Publication 15-T, Federal Income Tax Withholding Methods, to be released in mid-December for use with the new 2020 Form W-4, will provide the employer steps to figure federal withholding.

Go to About Form W-4 on IRS.gov for additional information.

Changes to QuickBooks Payroll

We received a letter from QuickBooks regarding changes to their payroll packages.  Here are some helpful highlights from QuickBook's letter: Here's a summary of changes you will experience, effective on or after March 1, 2020: Product Name Changes Previous Name New Name QuickBooks Online Enhanced Payroll (Self Service) QuickBooks Online Payroll Core QuickBooks Full Service Payroll QuickBooks Online Payroll Premium New Feature Highlights More information about these features here. QuickBooks Online Payroll Core QuickBooks Online Payroll Premium Full-service payroll, including automated tax and forms Premium time tracking by TSheets to run payroll faster and bill more Auto Payroll for salaried employees on direct deposit Expert Setup Review to ensure your setup is done right Access to health benefits for you and your team Access to an HR support center powered by Mammoth New Price Structures QuickBooks Online Payroll Core QuickBooks Online Payroll Premium Base Fee $45/month $75/month Wholesale Base Fee $22.50/month 50% off retail price for lifetime of subscription $37.50/month 50% off retail price for lifetime of subscription Employee Fee $4/month per employee $8/month per employee Contractor Fee $4/month per contractor payment via direct deposit $8/month per contractor payment via direct deposit For more details on pricing, including discounts for companies with more than 10 employees, please refer to this Guide to QuickBooks Online Payroll: transition to new lineup. This is just a snapshot of the new features available to you and your clients. For more information on QuickBooks Online Payroll Core and Premium, as well as our new product, QuickBooks Online Payroll Elite, check out our in-depth guide. There's nothing you need to do now—we'll monitor the transition closely to ensure there are no interruptions your business or your clients'. Learn more about what you will experience in our Guide to QuickBooks Online Payroll: transition to new lineup. Reminder: If who are directly billed by Intuit, you may upgrade, manage or cancel your subscription at any time by visiting Account and Settings and selecting Billing & Subscriptions.