Outsourcing Payroll Duties

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

Many employers outsource some or all their payroll and associated tax tasks to third-party payroll company. Third-party payroll provider can streamline organization operations and help satisfy filing due dates and deposit requirements. A few of the services they provide are:

– Administering payroll and employment taxes on behalf of the employer where the employer offers the funds initially to the third-party.
– Reporting, gathering and depositing work taxes with state and federal authorities.

Employers who outsource some or all their payroll responsibilities must consider the following:

– The company is eventually accountable for the deposit and payment of federal tax liabilities. Despite the fact that the company might forward the tax amounts to the third-party to make the tax deposits, the company is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS may assess penalties and interest on the employer’s account. The company is accountable for all taxes, charges and interest due. The company might also be held personally liable for particular unpaid federal taxes.
– If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS strongly recommends that the employer does not change their address of record to that of the payroll company as it may considerably limit the employer’s capability to be notified of tax matters involving their service.
– Electronic Funds Transfer (EFT) should be used to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers must ensure their payroll service providers are using EFTPS, so the employers can verify that payments are being made on their behalf. Employers ought to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly verify payments. A red flag ought to go up the first time a provider 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 permits companies to make any extra tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have actually been of individuals and business, who acting under the appearance of a payroll provider, have actually taken funds intended for payment of employment taxes.

EFTPS is a safe, accurate, and easy to use service that offers an immediate verification for each deal. This service is provided totally free of charge from the U.S. Department of Treasury and permits employers to make and confirm federal tax payments electronically 24 hours a day, 7 days a week through the web or by phone. For additional information, companies can register online at EFTPS.gov or call EFTPS Customer Service at 800-555-4477 for a registration type or to speak to a customer service agent.

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

Employers who think that an expense or notice received is a result of a problem with their payroll service supplier ought to call the IRS as quickly as possible by calling the number on the costs, composing to the IRS office that sent out the bill, calling 800-829-4933 or visiting a regional IRS workplace. For additional information about IRS notices, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.