Are you still taking time out of your day to make tax payments in person?
It's time to put down the checkbook and step away from the post office. There's an easier way to pay your taxes now: the Electronic Federal Tax Payment System.
With 12 million enrolled participants and $29.5 trillion in payments made since its inception in 1996, the EFTPS is the way of the future.
Save time, money, and stress by paying your taxes the easy way. Wondering what exactly the EFTPS is and how it works? Read on to learn everything you need to know.
What Is the EFTPS?
This is the online payment system that lets you pay taxes for your business online. Individuals may also use the Electronic Federal Tax Payment System to pay their estimated taxes when needed.
You can also use this system to pay via phone, rather than online. Either way, it saves you from making extra trips and taking more time than necessary to pay taxes.
What Can Be Paid With this System?
Using this system, you can pay several different types of business taxes. Let's take a look at some of the common types of taxes that you can pay using this method.
If you're self-employed, taxes for Medicare and Social Security won't be withheld automatically. Instead, you'll have to pay the self-employment tax.
If you own a business, your salary and its tax operate differently than those of your employees.
Income taxes won't be taken from your salary, so you'll need to regularly pay estimated taxes. These may be made every quarter, every month, or even every week.
This is the income tax that you, the employer, will withhold from your employees' wages.
In addition to income tax, there are also FICA tax portions that need to be withheld, including the taxes for Medicare and Social Security. You'll need to pay federal unemployment taxes, too.
Some products, including alcohol and gasoline, have excise taxes required by the government. These aren't taxes that you directly pay yourself, but rather taxes that are paid by the customer who buys those products.
Corporations have to pay federal corporate taxes, which can also be paid using the EFTPS.
Is This a Secure System?
Online security is a bigger concern than ever before. In 2016, there were 1,093 total data breaches in the U.S. Those breaches affected not just businesses, but government agencies too.
It makes sense to be concerned about the security of the Electronic Federal Tax Payment System. Is this really a safe way to pay your taxes?
You'll need to use your Employer Identification Number or Social Security Number to enroll, as well as your name, address, and bank account information. Then, you'll be given a private PIN to log in with.
This system helps keep your information secure. However, phishing scams are a common issue with this system.
An email that appears to be from the IRS is one way that people have been scammed into giving out their information in the past.
The email might say that more information is needed to complete your tax payment. When the email is opened, it will provide a link requesting more information.
However, the IRS never uses email to request more information from taxpayers. On their site, they warn, "The IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels."
It's important to always be cautious of giving out sensitive information. As long as you are careful and aware of common scamming tactics, this system is very secure.
How Do You Enroll?
Enrolling and using the EFTPS is fast, free, and easy.
In fact, when you request a new Employer Identification Number and expect to pay federal taxes, you're automatically enrolled in the Electronic Federal Tax Payment System.
However, even when you're pre-enrolled, it's your choice whether or not to activate your account.
If you aren't pre-enrolled, you can still sign up at any time. You can call the Electronic Federal Tax Payment System, or you can visit their website to get started.
What Do You Need Before You Enroll?
You will need a few pieces of information to complete the enrollment process.
First, you'll need a Taxpayer Identification Number. If you're a sole proprietor, you'll use your Social Security Number. Otherwise, you can use your Employer Identification Number.
You'll also need your name and address. Finally, you'll need to provide your bank account number and the corresponding routing number so that payments can be withdrawn. You can use a business or personal bank account for this.
Once you're on the website, select "Enrollment." Then, select "Business." You'll fill in your information and then submit the application. This process is easy and should only take a few minutes.
Next, the IRS will make sure the information you gave them is correct. It will take about five to seven business days for you to get your PIN so you can log in.
Once you have your PIN, go back to the site and click "Login." Then, select the "Need a Password" option. There, you can enter your PIN number.
You'll be asked to verify information about your bank, as well as your enrollment number. Make sure to keep the letter with your PIN on it, as that's where your enrollment number will be found.
After verifying this information, you'll click "Next," where you will be prompted to create a password.
Congratulations! You're now all set up to pay taxes online - the easy way.
This is a fast, simple way to pay your business taxes - and yes, it's even secure. So why not start using the EFTPS today?
As with all online activity, it's important to beware of phishing and other scams. However, if you're careful, you will be perfectly safe paying taxes with the EFTPS.
We believe that anything that makes taking care of your business finances easier is a good thing. That's why we recommend using this method to pay your taxes online.
There are also lots of other ways to make money matters easier for your business. Want to find out more? Contact us today to learn how we can help with payroll and more.