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Outsourcing Payroll Duties

Outsourcing payroll tasks can be a sound business practice, however … Know your tax duties as a company

Many companies outsource some or all their payroll and associated tax duties to third-party payroll company. Third-party payroll company can simplify business operations and assist satisfy filing deadlines and deposit requirements. Some of the services they offer are:

– Administering payroll and employment taxes on behalf of the company where the company provides the funds at first to the third-party.
– Reporting, collecting and depositing employment taxes with state and federal authorities.

Employers who contract out some or all their payroll responsibilities ought to think about the following:

– The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the employer might forward the tax totals up to the third-party to make the tax deposits, the employer is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might examine charges and interest on the . The company is liable for all taxes, penalties and interest due. The employer might also be held personally liable for certain unpaid federal taxes.
– If there are any issues with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly suggests that the employer does not change their address of record to that of the payroll provider as it may considerably limit the company’s capability to be informed of tax matters involving their company.
– Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are using EFTPS, so the companies can validate that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and utilize this PIN to occasionally confirm payments. A red flag must increase the first time a provider misses a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits employers to make any additional tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll provider, have stolen funds meant for payment of work taxes.

EFTPS is a secure, accurate, and simple to use service that offers an immediate confirmation for each transaction. This service is offered complimentary of charge from the U.S. Department of Treasury and permits employers to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. For more details, employers can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration kind or to speak with a customer support representative.

Remember, companies are eventually accountable for the payment of income tax kept and of both the employer and staff member parts of social security and Medicare taxes.

Employers who believe that a bill or notice received is an outcome of a problem with their payroll provider need to contact the IRS as quickly as possible by calling the number on the bill, composing to the IRS office that sent the expense, calling 800-829-4933 or checking out a local IRS office. For more details about IRS notices, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.