The Treasury Department has announced that, as a part of a three-pronged
initiative to reduce the amount of paper transactions it handles, most employers that are now allowed to use Federal Tax Deposit Coupons and checks to make payroll tax deposits will have to make those deposits electronically through the Electronic Federal Tax Payment System (EFTPS) beginning in 2011. The primary exemption will be for employers that have $2,500 or less in quarterly payroll tax liability and that pay their liability when filing their employment tax returns (e.g. Forms 941 or 944). Currently, employers are required to use EFTPS at the beginning of the second calendar year after their total federal tax deposits (e.g., payroll, income, excise, etc.) exceed $200,000 in a calendar year. Once they meet the threshold, they must use EFTPS even if their total tax deposits dip below $200,000 in a future year.
What does this mean for you? Starting in 2011, if you make your payroll tax liability deposits in any manner other than paying them with the quarterly return, you will be required to deposit them electronically through EFTPS. You will no longer be allowed to pay them at your bank with a coupon.
As soon as possible, you will need to sign up for EFTPS. It is easy and it is free. Just go to www.irs.gov and on the right hand side of the page, you will see the EFTPS logo. Click on this and it will take you to a page that contains a brief description of the program and a link which allows you to register for the program. Some of the items that you will need to complete the registration besides the company name and address include your company’s Federal I.D. number and banking information. You will also need to assign a designated individual as the primary contact.
Once your company is enrolled, you can make any of your federal tax deposits via the internet or telephone. By 7:00 p.m.(CT) at least one calendar day in advance of the due date, you access EFTPS directly to report your tax information. You will instruct EFTPS to move the funds from your account to the Treasury’s account for payment of your federal taxes. Funds will not move from your account until the date you indicate. You receive an immediate acknowledgement of your payment instructions, and your bank statement will confirm the payment was made. You can initiate your tax payment 24 hours a day, seven days a week.
As an added convenience, EFTPS allows taxpayers to schedule tax payments in advance. Businesses can schedule payments up to 120 days in advance of their tax due date. Individuals can schedule payments up to 365 days in advance of their tax due date. EFTPS will automatically make your payments for you on the due date you indicate. Scheduled payments can be changed or cancelled up to 2 business days in advance of the scheduled payment date.
QuickBooks allows you to pay your payroll taxes via EFTPS conveniently through the 'pay liabilities' function rather than by paper check. QuickBooks also allows you to e-file your 941 Quarterly Reports. Furthermore, QuickBooks payroll provides an inexpensive and easy to use direct deposit feature.
We can assist you in your implementation of these convenient, labor saving new features.
If you have any questions regarding EFTPS or anything else regarding your payroll, QuickBooks or business, please contact the professionals at Ed Slovacek CPA at 979.846.4667 (email - info@EdSlovacekCPA.com) and we are always ready to help make your business life easier.
You cant say that payroll is not a time-consuming tasks.Even when you are running a small business then managing payroll is still time consuming because you have to deal with several financial transactions. When you outsource your payroll, you can give focus more on the other important aspects of your business.
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