Paying cash wages
What does paying cash wages "under the table" mean?
This common phrase means the payment of wages to employees by cash, check, or other compensation, that is disguised with the intent of avoiding the payment of payroll taxes.
Some excuses used to justify paying cash wages "under the table""?
To avoid tax and insurance expenses associated with payroll.
To create an unfair competitive advantage.
Employees request no withholdings.
Reduces bookkeeping burden.
It is a practice in some industries.
Other businesses in my industry pay cash wages "under the table" so why shoudn't I?
It is illegal and you could be criminally prosecuted.
This practice is financially dangerous to your business.
Unemployment Insurance and FICA matching taxes are paid by you, the employer. State disability and Personal Income Tax are paid by your employees. However, if you fail to withhold employee-paid taxes, they become your responsibility.
Does it pay?
No! You would pay 20 times more in payroll taxes, penalty and interest which will grow substantially when other governmental agencies become aware of the employer's illegal activity.
The survival of your business could depend on your ability to pay your tax liabilities, penalties, and interest.
What if my employees request cash wages "under the table"?
Deny the request.
This is not an option. You have a legal obligation to withhold payroll taxes and report your employees' wages.
If your employees are injured on or off the job they have a right to file a claim for Worker's Compensation or State Disability Insurance benefits. If your employees' wages have not been reported, an investigation will follow.