Processing payroll is a complicated, tedious task that requires attention to ever-changing tax codes and compliance with employment laws. Payroll includes accurately calculating employee wages and income tax withholdings, tracking vacation and sick pay, and deducting premium payments for health, dental, and retirement benefits. Because of the complexities of payroll processing, many small businesses use payroll processing services instead of dedicating staff and salary to in-house payroll. There’s a cost for this, which varies by providers and types of services provided, but it can be more economical to outsource payroll. The benefits of using an outside payroll service besides saving money include convenience, functionality, accuracy, and compliance. Business owners and managers, especially small business owners and entrepreneurs who may have very limited resources, struggle with payroll processing. Managing payroll in-house may save money, but mistakes like not sending payments to the IRS can quickly negate any advantage from processing payroll this way. To stay on top of payroll processing successfully, a small business owner must have solid accounting skills and tax law familiarity. Payroll involves more than just calculating hours and wages and writing paychecks. Payroll also involves the following:
These represent a lot of issue areas that need attention and action for compliance, time that busy business owners and managers don’t often have. Without the necessary attention to payroll and IRS issues, a business can be at risk of serious financial and legal problems.
An important reason to use corporate payroll services is that the main focus of payroll services is to ensure compliance for payroll tax issues. Payroll taxes change yearly at a minimum, and it’s not easy for a busy owner or manager to keep up with or understand all the changes. In addition, states come up with new assessments on a regular basis. A corporate payroll service will give advanced notice and explanations of upcoming changes and what they mean for employers. They will also incorporate the changes into the payroll processing as part of their service so employers don’t have any last minute adjustments to make or get caught by surprise with changes they didn’t know about. When new forms come out, a corporate payroll service will also implement them automatically, preventing any misfiling problems. This helps employers keep up with forms required by different taxing agencies and any new assessments from changing business revenues. Forms like Form 941-M Employer’s Monthly Federal Tax Return, Form 941 Employer’s Quarterly Federal Tax Return, and Form 940 Employer’s Annual Federal Unemployment Tax Return all have different purposes and schedules for filing and payments, and can change from year to year.
Some payroll services will help businesses with things like Washington L&I and Nevada Modified Business Tax, and other things related to payroll processing but not specifically classified as taxes. Many corporate payroll services provide the convenience of accurate, legally compliant payroll processing with a simple transfer of wage and hour information, and offer value-added services such as retirement plans, management reporting, and W2 preparation and distribution. Corporate payroll services understand and handle state and federal legal compliance obligations so employers are assured of accuracy and compliance and a resource for easily staying up-to-date with new tax laws.
PAYDAY Workforce Solutions provides a single database SAAS solution for Human Capital Management (HCM) including payroll, human resources, time management, benefits administration and onboarding to companies of all sizes and in various industries.
625 The City Drive South, Suite 250
Orange, CA 92868