As your business grows, you will doubtless need to expand your workforce – either through independent contractors or regular employees – and the costs associated with this can become complicated and are strictly regulated by both state and federal revenue agencies. Payroll can take up a lot of your time as a business owner, whether you run it yourself or have a software system in place, and so it can be both wise and cost effective to hire a payroll professional to manage it for you.
What should a payroll professional be able to do for your company?
They should be able to offer you support in many different areas of payroll, but there are some functions that they specialize in and which can take a lot of the weight from your shoulders, while ensuring that you and your company remain tax and payroll law compliant, and here are a few examples:
With regular employees, comes the responsibility of filing with the IRS to get their identification numbers, and these are essential for filing W-2 wage information and reporting and depositing employee wage withholdings.
You are also required to make quarterly federal and state unemployment tax deposits, and a payroll professional can help ensure that you file all the necessary tax forms. Your ‘fiscal year’ will then be established, and this will go on to determine your schedule of withholding.
Independent contractors and regular employees must be classified correctly to stay compliant with IRS rules and regulations. It may be that some of your contracted workers are hired on a regular basis, leading the IRS to ask that you classify them as regular employees, meaning that they are then subject to Medicare and Social Security withholdings. A payroll professional will help you ensure that all workers are classified correctly.
A W-4 income tax withholding form must be completed by every employee; the IRS requires that Medicare and Social Security taxes are withheld, and an established rate of federal income tax. Unemployment taxes both state and federal, are also required to be withheld and then matched for regular deposits. Quarterly filing and deposits can be the sole responsibility of your payroll processing professional, the schedule for which is determined by your fiscal year.
There are several other factors that can affect payroll withholdings, and since they can be complex and confusing, it really is sensible to let your payroll professional handle things.
State and federal laws must be strictly adhered to when paying regular employees, and there are rules surrounding payment schedules and wage amounts, too. Employees must receive an itemized payroll statement with certain information and details on it, and it goes without saying that these should be issued in a timely manner to achieve a contented workforce. Not complying with any of the regulations can land you in deep water and result in costly fines, so seeking professional help with this is a no brainer.
With advanced software at their fingertips and a head for figures, a payroll professional can easily ensure that your records are kept updated and in order, and this can come in especially useful in the case of an IRS audit.
Payroll is made that much simpler when you use the services of a payroll professional, and you can rest assured that not only will you always be tax law compliant, but that your employees will always receive the correct wages, at the correct time.