Outsourcing Payroll Duties

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

Many employers contract out some or all their payroll and associated tax responsibilities to third-party payroll provider. Third-party payroll provider can streamline organization operations and assist satisfy filing deadlines and deposit requirements. A few of the services they provide are:

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

Employers who outsource some or all their payroll duties ought to think about the following:

– The company is ultimately accountable for the deposit and payment of federal tax liabilities. Despite the fact that the company may 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 evaluate charges and interest on the employer’s account. The employer is liable for all taxes, penalties and interest due. The employer may likewise be held personally responsible for specific unpaid federal taxes.
– If there are any concerns with an account, then the IRS will send correspondence to the company at the address of record. The suggests that the company does not change their address of record to that of the payroll company as it might significantly limit the employer’s ability to be notified of tax matters involving their service.
– Electronic Funds Transfer (EFT) need to be utilized to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll companies are using EFTPS, so the companies can confirm that payments are being made on their behalf. Employers must sign up on the EFTPS system to get their own PIN and use this PIN to regularly validate payments. A warning needs to go up the first time a service provider misses out on 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 allows employers to make any additional tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have actually been prosecutions of people and companies, who acting under the look of a payroll provider, have taken funds intended for payment of employment taxes.

EFTPS is a secure, precise, and simple to utilize service that provides an instant verification for each deal. This service is used complimentary of charge from the U.S. Department of Treasury and permits employers to make and validate federal tax payments electronically 24 hours a day, 7 days a week through the internet or by phone. To learn more, companies can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for a registration kind or to speak with a customer care representative.

Remember, companies are eventually responsible for the payment of earnings tax kept and of both the company and staff member parts of social security and Medicare taxes.

Employers who believe that a costs or notification gotten is a result of a problem with their payroll provider need to contact the IRS as soon as possible by calling the number on the costs, composing to the IRS office that sent the expense, calling 800-829-4933 or visiting a local IRS office. For more details about IRS notices, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.