Even if your business has only a few employees, you may be considering outsourcing your payroll processing to a specialist. What can a payroll processing service do for you?
- It can help keep you compliant. You may have employees in more than one state and need to comply with reporting, withholding, and paying state and local income taxes. This can be complicated, especially if you have to deal with FICA taxes on wages, Social Security withholding that's capped for highly paid employees, and additional Medicare tax. Payroll servicers keep up to date with employment tax law changes and update your policy for you.
- You won't have to worry about the schedules and details for making payments and filing payroll tax reports for federal tax, state tax, tax withholding, FICA taxes, unemployment insurance and workers' compensation insurance, nor for individual state payroll options. The payroll service can provide detailed records of each payroll, including gross pay, withholdings and net pay. An outsourced partner can take care of this for you.
- Some services file for you, charging an additional fee for each check to assign a payroll specialist to file your tax forms based on information you give them. Others provide you with a subscription for payroll software as part of their service; you use the software to pay taxes. Payroll providers can integrate with other services you use, including accounting, time-tracking software and HR functionality. Speak with a qualified payroll professional to match your needs with their services.
- Some payroll service providers offer an array of human resources and risk management services such as providing job description templates and access to job-posting sites. They can provide background check support as well as recruiting procedures and benefits provisions.
- Payroll services make your firm nimble. If you need to rapidly scale up your number of employees, you can add them to payroll seamlessly. If you need to scale down effectively and rapidly, they can help you downsize payroll.
- Payroll services manage and streamline rules, regulations and services regarding withholding and employee benefits. For example, if you provide a 401(k) plan, errors can cost you. Employee salary deferrals must be deposited in individual accounts within seven days of payroll. If you miss even one day, the IRS may audit your plan. Payroll providers can ensure these deposits will be made on time.
- Do you have a business with a lot of compliance issues? Some service providers can help you comply with applicable safety and inspection standards, relevant Equal Employment Opportunity Commission standards and federal laws on harassment.
No matter whether you outsource or not, you are still legally responsible for tax and other compliance issues. However, by hiring a qualified service provider, you'll take a lot of weight off your shoulders. A good payroll service isn't cheap, but it greatly reduces your risk of an IRS fine. Consider your outsourcing options today.
