The short answer
New owners who hire need an EIN, must file Form 941 each quarter and must deposit payroll tax on time. Late deposits cost up to 15%.
15%The top failure to deposit penalty, after an IRS demand for payment.Source: IRS: Failure to deposit penalty
You can get an EIN online for free. If approved, it is issued right away.
If you hire, Form 941 is due every quarter for withheld income tax, Social Security and Medicare.
Withheld payroll tax is held in trust. If it is not paid, the IRS can charge it to the owner personally.
Steps that help
- Get your EIN only from IRS.gov. It is free.
- Put payroll deposits on autopay.
- Decide early who is an employee and who is a contractor.
Help that may fit
Payroll tax debt: Unpaid payroll taxes can become your personal debt.Payment plan: Pay what you owe a little each month.Penalty relief: Ask the IRS to remove late filing or late payment penalties.
Results depend on your situation. Not every case qualifies.
Common questions
Can I be personally liable for my company's payroll tax?
Yes, through the Trust Fund Recovery Penalty, if you were responsible and willfully did not pay.
Can I get help if I already owe?
Yes. A tax pro can look at payment plans, penalty relief and other options for your case. Results depend on your situation. Not every case qualifies.