Don't Let Payroll Tax Sneak Up On Your Clients

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Running Time: 7.03

Date: 01/02/2012

Payroll tax problems can sneak up on you - make sure you're clear about your own position.

Payroll tax wasn't intended to apply to a lot of small businesses, but the threshold has gone up much more slowly in the past 14 years, bringing many more into the tax net. Michael Jones of Cummings Flavel McCormack says that's one of three ways in which a tax bill can sneak up on you. Another is that the definition of "wages" is very broad - what a business owner believes is a fee paid to a contractor may be ruled to be liable to payroll tax. And independent businesses with common staff or ownership can be "grouped", making them all exceed the tax threshold. It's important to apply early to have them "degrouped" - it will be much harder once a tax bill has been determined.