Outsourcing Payroll Duties

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

Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll company. Third-party payroll provider can improve business operations and assist fulfill filing deadlines and deposit requirements. A few of the services they provide 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 transferring employment taxes with state and federal authorities.

Employers who contract out some or all their payroll obligations must think about the following:

– The employer 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 accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might assess penalties and interest on the company’s account. The employer is responsible for all taxes, charges and interest due. The company may likewise be held personally liable for particular overdue federal taxes.
– If there are any concerns with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly suggests that the employer does not change their address of record to that of the payroll service supplier as it might substantially restrict the company’s capability to be notified of tax matters involving their company.
– Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll service providers are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A warning should go up the very first time a service company misses out on a payment or makes a late payment. When an employer signs up on EFTPS they will have on-line access to their payment for 16 months. In addition, EFTPS allows companies to make any extra tax payments that their third-party company is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and business, who acting under the appearance of a payroll company, have actually stolen funds intended for payment of employment taxes.

EFTPS is a safe and secure, accurate, and simple to utilize service that supplies an immediate verification for each deal. This service is provided totally free of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more info, employers can register online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration form or to consult with a customer service agent.

Remember, employers are eventually responsible for the payment of earnings tax kept and of both the employer and staff member portions of social security and Medicare taxes.

Employers who believe that a costs or notice gotten is a result of an issue with their payroll company must contact the IRS as quickly as possible by calling the number on the expense, writing to the IRS office that sent out the expense, calling 800-829-4933 or going to a local IRS workplace. To find out more about IRS notices, costs and payment options, describe Publication 594, The IRS Collection Process PDF.