by Shannon Bernier Buffington
No matter what economists say, if you ask the majority of small business owner’s they will tell you that there has not been much of an improvement in the economy lately. Being forced to cut corners where necessary many business owners are bringing services in house that were once outsourced in an attempt to save money.
One task that no business owner should take on themselves is the responsibility of making sure his payroll taxes are paid. With hundreds of tax law changes that occur every year, it is near impossible for the small business owner to stay on top of these ever-changing calculations that have the ability to permanently cripple a business if not managed properly.
With the advent of so many self service programs like QuickBooks, why not keep it in house? It is affordable and easy to use. The number one reason to outsource your business’s payroll is the liability that you take on in processing it yourself. If you mis-type one entry or forget to update your self-serve software when recommended, you put yourself at risk of having miscalculations which could turn in to penalties. And let me tell you, the government doesn’t go easy on businesses that do not pay them what they are owed. However, when you outsource your payroll to a reputable, well known company that is bonded and insured and provides an accuracy guarantee, they take on the liability and not you, essentially acting like an insurance policy to insulate your business from penalties from the IRS.
Every year there are over 8,000,000 penalties assessed from the IRS for inaccurate or delinquent remittance of Federal Tax Liabilities and these penalties can cost anywhere from a few hundred to a few thousand dollars. The good news is, the cost of processing your payroll with an outside provider for an entire year is typically less than the cost of a penalty and it’s a write-off.
In recent years many payroll providers have expanded beyond payroll processing to include many additional self-service options like Human Resource and State Unemployment Management Assistance all at one low cost. With tax laws constantly changing and HR compliance becoming more stringent every day, the risk a business owner runs by attempting to take these tasks on himself is simply too great.
Time is money, so the time spent trying to figure out tax liabilities or HR issues is time that could be better spent focusing on activities that will actually generate the business more revenue, not cost them.
Shannon Bernier-Buffington is a payroll consultant with Paychex.