Payroll is where the IRS gets paid first
Income taxes are due once a year. Payroll taxes are due constantly — and the penalties for missing a deposit are some of the steepest in the tax code. The IRS treats unpaid payroll taxes as money you collected on its behalf and didn't remit, which is why payroll problems escalate fast.
The basic stack of payroll taxes
Every paycheck involves:
- Federal income tax withholding
- Social Security (6.2% employee + 6.2% employer)
- Medicare (1.45% employee + 1.45% employer, plus additional Medicare tax over thresholds)
- Federal Unemployment (FUTA) — employer only
- State income tax withholding (in most states)
- State unemployment (SUTA) — employer only
- Local taxes (in some cities and counties)
Each has its own deposit schedule, form, and deadline.
The most common mistakes we clean up
1. Misclassifying workers
Calling someone a 1099 contractor when they're really a W-2 employee is the #1 issue. The IRS, the Department of Labor, and most states all have their own tests, and none of them care what your contract says — they care what the working relationship actually looks like.
2. Missing deposit deadlines
Depending on your liability, you're a monthly or semi-weekly depositor. Miss the deadline by one day and the penalty starts at 2%. Miss by 16+ days and it's 10%. Miss after a notice and it's 15%. These compound fast.
3. Not running yourself through payroll (S-Corps)
If your LLC has an S-Corp election, you must pay yourself a reasonable salary through payroll. Owner-only S-Corps still need quarterly 941s and annual W-2s. We routinely take over books from owners who skipped this for a year or more — and the cleanup matters because the S-Corp election itself is at risk.
4. Wrong state setup
Hiring someone who lives or works in another state? You may need to register for withholding and unemployment there. Remote work has made this messier than it used to be.
5. Year-end form errors
W-2s, W-3s, 1099-NECs, 1096s — all due by January 31. Wrong totals, wrong addresses, or missing forms generate penalties per form.
What clean payroll looks like
"The goal isn't perfect — it's predictable. Same process every payroll, same deposits on the same day, same forms filed on time."
Premier Tax handles the full stack for clients: gross-to-net calculation, direct deposit, tax deposits, quarterly returns (Form 941, state equivalents), annual W-2/1099 filing, and new-hire reporting. One predictable monthly fee, no surprise notices.
When to outsource
If you have any W-2 employees, an S-Corp election, or workers in multiple states, doing payroll yourself rarely makes sense. The cost of one missed deposit usually exceeds a year of payroll service. Talk to us before the next pay run if any of that sounds familiar.
