Tax Compliance and Your NC Small Business

Owning a business can have many benefits. However, many small business owners view keeping up-to-date with ever-changing tax laws challenging considering how many other responsibilities they have. While bookkeeping is one of our core competencies here at Murray Moyer, there are some basic steps every company can take prior to engaging with third party support.

Below, we will briefly touch on different obligations you have as a business owner to ensure tax compliance, especially as it relates to payroll management and collection issues. We will also address the potential adverse consequences associated with not complying with your company‚Äôs tax obligations. 

Your Tax Obligations as a Small Business Owner in North Carolina

As for payroll management, your business has a few key tax compliance responsibilities, which are: 

  • Securing the appropriate identification numbers, including an Employee Identification Number (EIN) and Withholding Identification Number from respective federal and state revenue agencies
  • Having your workers complete required state and federal tax forms, such as the W-4, NC-4, or I-9
  • Determining your company’s withholding frequency and filling out the appropriate form, NC-5 or NC-5Q accordingly
  • Identifying the appropriate form your company should file with the Internal Revenue Service (IRS) to remit payroll taxes
  • Withholding and paying mandated payroll tax deductions for unemployment, Medicare, and Social Security
  • Paying State Unemployment Taxes (SUTA) as well as Federal Unemployment Taxes (FUTA) 

The different tax compliance obligations described above may not be applicable to all North Carolina businesses. Thus, it can be helpful to consult with a tax law attorney who regularly works with businesses like yours to ensure your company is compliant with NCDOR and IRS regulations.

What To Do if Your Company Is Facing Tax Non-Compliance Allegations

Collections issues may arise if you don’t make the required payroll tax or other obligatory payments. What do collection efforts entail? From a business perspective, the IRS’ or the NCDOR’s attempts to recover what they believe they are due may look like the following:

  • The IRS may place a lien on any assets you own as an employer
  • An employer may have to answer to misclassification or unlawful withholding claims filed with state agencies
  • The IRS can impose a Trust Fund Recovery Penalty (TFRP) against employers and their representatives who they believe are responsible for not turning over the withheld funds
  • An employee may file a civil lawsuit against an employer to recover any taxes along with penalties, interest, and fines they may have incurred because of insufficient or non-payments
  • Criminal prosecution may be pursued by state or federal tax authorities if they can show that an employer (or their affiliates like bookkeepers) intentionally did not remit payroll withholding taxes

The examples above are certainly not comprehensive, but they give you an idea as to some of the impacts of not properly reporting payroll taxes as a small business in NC. 
If you have any concerns about your obligations or you are facing legal action because of your handling of these matters, consult with legal counsel to help you understand how to resolve these issues as quickly and cost-efficiently as possible. At Murray Moyer, PLLC, we have a long track record of helping businesses like yours ensure tax compliance and assisting companies that require tax representation and are eager to assist you with any concerns you may have.

Written by Justin Moyer on March 12, 2024.