Outsourcing Payroll Duties

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

Many companies contract out some or all their payroll and associated tax tasks to third-party payroll provider. Third-party payroll provider can simplify organization operations and help satisfy filing deadlines and deposit requirements. Some of the services they provide are:

– Administering payroll and work taxes on behalf of the company where the employer offers the funds at first to the third-party.
– Reporting, collecting and depositing work 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 responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company 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 may evaluate charges and interest on the employer’s account. The company is accountable for all taxes, penalties and interest due. The employer may also be held personally liable for specific unsettled federal taxes.
– If there are any problems with an account, then the IRS will send out correspondence to the company at the address of record. The IRS highly recommends that the employer does not change their address of record to that of the payroll provider as it might significantly limit the employer’s capability to be notified of tax matters involving their business.
– Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers need to ensure their payroll providers are using EFTPS, so the companies can confirm that payments are being made on their behalf. Employers should register on the EFTPS system to get their own PIN and use this PIN to occasionally confirm payments. A warning needs to go up the very first time a service company misses out on a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables companies to make any extra tax payments that their third-party provider is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and business, who acting under the appearance of a payroll company, have stolen funds planned for payment of employment taxes.

EFTPS is a secure, accurate, and easy to use service that provides an immediate verification for each deal. This service is used free of charge from the U.S. Department of Treasury and enables employers to make and confirm federal tax payments electronically 24 hr a day, 7 days a week through the internet or by phone. To learn more, employers can register online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment kind or to talk with a client service agent.

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

Employers who think that a costs or notice gotten is an of an issue with their payroll service provider must call the IRS as quickly as possible by calling the number on the bill, composing to the IRS workplace that sent the expense, calling 800-829-4933 or going to a regional IRS office. To learn more about IRS notifications, costs and payment alternatives, refer to Publication 594, The IRS Collection Process PDF.