One of the major reasons that Recycling Businesses close in the United States is the failure to file and pay payroll taxes.
This mistake is more common than most would suspect. You have a weekly payroll, and weekly payroll tax deposits. You have a month where your collections go down, or you lose a couple of your largest customers. The time comes for you to make the deposit, and you don’t make it figuring that a month from now you’ll just make the deposit when the payroll tax returns are due to be filed. A month later you still don’t have the money. What do you do? Your can’t make the payment so maybe you don’t file the 941, or the IL 941. Now your into a new quarter and the cash shortage continues. The cycle continues. So now your behind several quarters. What do you do?
As a highly recommended corporate and partnership public accounting firm in Chicago, we have seen this more times than we care to remember. Most corporations and partnerships go through something like this more than once in their history. New customers do not understand the severity of the problem. They assume that the Internal Revenue Service or the Illinois Department of Revenue will be patient and wait for the money. Nothing could be further from the truth.
The problem is that most tax payments are not treated like regular bills or payables. Primarily, these are amounts that were withheld out of an employee’s check. As the person responsible at the company for making payroll tax deposits, you are considered a Trustee on behalf of the government to get the government its money. Once again, its not your money or money that belongs to your company. Its money that was taken out of an employee’s check that belongs to the government. If these trustee portions do not get to the IRS or the IDOR, than as the trustee you will probably be held personally liable. What does this mean? If you take your business through a bankruptcy, then you will personally still be held liable. If you go through a personal bankruptcy, then you will also still owe the money. Given the fact that these unpaid amounts were never your money in the first place, they cannot be included in a personal or company bankruptcy.
The IRS and the IDOR will not simply forget that this amount is owed. You will face penalties, interest, liens, levies and additional collection actions. Ultimately your recycling business’ ability to complete an annual corporation or partnership renewal with the secretary of state will probably be held up. In addition to that, your ability to renew business licenses will also probably be withheld. Effectively, this ultimately may put you out of business.
If this is the position that you find yourself and your recycling business in, then please call out offices today. Make no mistake about it. This is a serious problem. Do not try to face this on your own. The Standard Accounting Packages section of this page may have what you need. We will complete your unfiled payroll tax returns for as little as $175 per quarter, or negotiate payment plans starting at $500. No matter how you are involved in The Recycling Industry of Chicago, ignoring this problem is not a solution. Call our offices today.