Outsourcing Payroll Duties

Outsourcing payroll responsibilities can be a sound business practice, however … Know your tax duties as a company

Many employers outsource some or all their payroll and related tax duties to third-party payroll provider. Third-party payroll provider can simplify business operations and help satisfy filing deadlines and deposit requirements. A few of the services they offer are:

– Administering payroll and work taxes on behalf of the company where the provides the funds at first to the third-party.
– Reporting, gathering and transferring employment taxes with state and federal authorities.

Employers who outsource some or all their payroll obligations should think about the following:

– The company is eventually 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 company is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS might examine charges and interest on the employer’s account. The company is accountable for all taxes, charges and interest due. The employer may also be held personally accountable 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 company as it might considerably limit the company’s capability to be informed of tax matters including their service.
– Electronic Funds Transfer (EFT) need to be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers should guarantee their payroll service providers are using 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 verify payments. A warning needs to increase the very first time a company misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS permits employers to make any additional tax payments that their third-party supplier is not making on their behalf such as estimated tax payments. There have been prosecutions of people and companies, who acting under the appearance of a payroll company, have stolen funds intended for payment of work taxes.

EFTPS is a secure, precise, and easy to use service that offers an instant verification for each transaction. This service is used totally free of charge from the U.S. Department of Treasury and allows employers to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the web or by phone. For more details, employers can register online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration type or to talk to a client service representative.

Remember, companies are eventually accountable for the payment of earnings 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 gotten is an outcome of an issue with their payroll company must get in touch with the IRS as quickly as possible by calling the number on the bill, writing to the IRS workplace that sent the bill, calling 800-829-4933 or checking out a local IRS office. For additional information about IRS notifications, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.