Outsourcing Payroll Duties

Outsourcing payroll tasks can be a sound organization practice, but … Know your tax duties as an employer

Many companies contract out some or all their payroll and associated tax tasks to third-party payroll service suppliers. Third-party payroll company can improve business operations and help fulfill 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 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 obligations ought to consider the following:

– The company is ultimately accountable for the deposit and payment of federal tax liabilities. Although the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS might assess penalties and interest on the company’s account. The company is responsible for all taxes, penalties and interest due. The company might likewise be held personally responsible for specific overdue 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 IRS strongly recommends that the company does not change their address of record to that of the payroll provider as it might substantially restrict the company’s capability to be of tax matters including their business.
– Electronic Funds Transfer (EFT) need to be used to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll suppliers are utilizing EFTPS, so the companies can verify that payments are being made on their behalf. Employers should sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A warning ought to go up the very first time a provider misses a payment or makes a late payment. When a company signs up on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS enables companies to make any additional tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have actually been prosecutions of people and companies, who acting under the appearance of a payroll service supplier, have actually taken funds intended for payment of work taxes.

EFTPS is a protected, accurate, and easy to utilize service that supplies an immediate confirmation for each deal. This service is used 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. To learn more, companies can enlist online at EFTPS.gov or call EFTPS Customer support at 800-555-4477 for a registration form or to talk to a customer support agent.

Remember, companies are ultimately responsible for the payment of income tax withheld and of both the employer and staff member parts of social security and Medicare taxes.

Employers who think that a costs or notification received is a result of an issue with their payroll company ought to contact the IRS as quickly as possible by calling the number on the bill, writing to the IRS workplace that sent out the costs, calling 800-829-4933 or visiting a local IRS office. To find out more about IRS notifications, expenses and payment choices, describe Publication 594, The IRS Collection Process PDF.