Annual Payroll FAQ
Question: What are the rules for sole-employee businesses concerning payroll taxes?
Answer: Single-owner sole-employee business ventures can file and remit payroll taxes on an annual basis without penalty. While a bit unconventional, remitting appropriate payroll and withholding taxes once a year in late December and early January is often a smart business decision. I generally recommend this arrangement for “solo-preneurs” who are good savers but must endure erratic customer receipts and subsequent periodic swings in cash flow. More importantly, it enables looking back and analyzing how the current year played out. It’s also an opportunity to consider what may be on the horizon for the ensuing year.
