It’s the root of all evil, and also the thing that makes the world go ‘round. Burns a hole in your pocket when you have a lot of it, and makes you tighten your belt when it’s gone.
The effect of money on thinking and behavior is the subject of countless research studies into things like whether handling currency or viewing images of hundred-dollar bills can have an effect on how we act or feel. Even children understand money carries more than economic attributes. Money’s a sensitive subject and carries as many conversational taboos as politics or religion.
Well, money complicates things, especially relationships – something the payroll industry understands as much as anyone. Particularly because payroll clients often have various ways about how they want their funds to be handled – and how much control they’re comfortable sharing.
The cultural minefield around money is a big part of the reason decisions around using third-party expertise to help manage your payroll tax processes can feel, well, complicated. At times, it’s enough to make even the first step feel like a journey into terra incognita.
But those decisions don’t have to be that way.
You just need to find the right guide.
Payroll Tax Options: It’s Easy to Get Lost Without The Right Guide
Remember what life was like before navigating became as easy as typing an address into your phone? We’re in the sprawling wilderness of Los Angeles and trying to fold a road map while navigating our traffic is enough to cause flashbacks in even the most road-hardened Californian.
Today, heading almost anywhere without a smartphone can leave us feeling like we’re headed into the unknown. But with a map app in our hands, we can get where we need to go without getting in touch with our inner Lewis and Clark.
Our point is this: There’s nothing wrong with getting expert help, especially when it comes to handling money. What you need to make sure of, though, is finding third-party expertise that doesn’t expect you to outsource the decision making or accept a one-size fits all process.
Whether you just need a good map or an entire expedition team for your business journey, there are lots of options for how to get there. And third-party expertise is the GPS that can help you start, grow or develop your business.
Here’s an example of how third-party expertise is a clear route to success.
As the payroll tax manager at ManagedPAY in Las Vegas, Cecelia Lee is more than familiar with the value of having options. ManagedPAY offers clients a wide variety of customized expertise and solutions for everything from payroll to risk management and HR.
ManagedPAY clients come from a wide variety of industries across the county and their needs and preferences are as varied as their businesses.
That’s one of the reasons the company became a client of Payroll Tax Management using FlexTax Direct Bank and FlexTax Returns Only options. Under those options, PTM handles the tax returns, but ManagedPAY or its clients make the tax payments themselves. Many of the company’s clients have large tax liabilities and prefer to make one large payment. It’s also a question of control. “They prefer to control the holding of their money,” Lee says.
“The benefit (of using Payroll Tax Management) is now our returns are prepared for us,” but clients don’t have to provide power of attorney to their payroll provider, Lee says.
Third-party expertise gives the company the flexibility to offer its clients the customized solutions they want. “When it works really well … it’s really convenient,” she says.
Steer Clear: Avoid the Errors of Inexperience With The Right Path
So, how do you get started? If you’re new to the payroll business, you may want to seek professional expertise to eliminate the possibility of errors that arise from inexperience. When it comes to managing your clients’ payroll taxes, what you don’t know can hurt you – along with your clients. This is where research pays off.
You need to find the right path that works for you. Like those explorers who took those steps off the edge of the map, payroll taxes are not for the faint of heart. Maybe you’ve got clients who are already dealing with tax notices, or whose business is growing across state lines. At the same time, you may have clients with reservations around letting someone else hold money.
The challenge of the patchwork of over 11,000 state and local tax jurisdictions, each with their own laws, regulations and deadlines has to be navigated under the threat of penalties. It can be hard enough to keep up with compliance in one state. Do you really want to tackle all of them?
But multistate taxes are just one issue to consider. Staffing is another – at quarter-end, you may find yourself in need of six extra employees just to close the books. Hiring an accountant alone can cost more than $70,000 a year. Throw in a client who forgets about manual checks written out for bonuses and you have a mess on your hands.
Even tiny mistakes add up. Clients provide the wrong information and corrections need to be made – quickly. Because once you finish one quarter, it’s only a matter of weeks before you have to start the process all over again. If it keeps up, that money burning a hole in your pocket might just be burning up, period.
Educating clients on what they need to provide is key in providing excellent payroll service.
Finding A Detour Around Growth Problems
Sometimes, the decision to find third-party payroll tax expertise has nothing to do with inexperience. Keeping up with the demands of a growing business can be a real detour. But a partner who can help you grow and keep up is a great asset.
Here’s an example: When your payroll business is growing, your tax impound account is growing too. It’s generating interest, but probably also generating anxiety. That’s a trade-off some payroll providers are willing to make.
For others, in-house payroll tax management start to feel a little risky, especially at quarter end when they’ve got hundreds or even thousands of clients’ taxes to manage. Does this sound familiar? Can your software keep up with the job?
You’ve got options. Maybe you just need better software and a little bit of advice around staying compliant. Maybe you need to put in a tax department.
Maybe you need something that offers the best of both.
Asking the right questions can help you chart your course at each step of your growth:
- How are you handling quarter end? If it’s chaotic, and you’re taking measures like pulling workers from important tasks to help out, a change is in order. Ramping up four times a year gets expensive.
- How is your staffing? What happens when employees are sick or on vacation?
- Are your needs likely to change over time?
- Do you want to be in the tax business? If your answer’s no, maybe you’d prefer to work with a third-party provider.
- What sort of expertise do you have in-house? What sort of expertise are you lacking? It’s one thing to be good with numbers, and another thing to be on top of regulatory requirements.
- Do you want to impound client money?
- How much control do you want to have over payroll taxes?
- Do you want a custom plan that is designed just for your company?
Be the Captain Of Your Own Journey
Ultimately, you’re in the driver’s seat. Depending on the level of control you want to have with the tax portion of your payroll, look for a provider who can offer several levels of services. You may want services to decrease over time so that you can learn to walk before you run. Or increased, if you’d like to offload more work as your business grows. Whether you want full service or a few add-ons, the choice of how much control you retain is yours.
With Payroll Tax Management, clients can choose from four options depending on their needs:
- PayTax Plus: This is the plan for you if you want PTM to handle all of your tax work. PTM does everything and lets you focus on your core business.
- FlexTax: With this option, you get some of the flexibility of doing taxes in-house, while leveraging PTM’s back-office processing to lighten your workload. Private-labeling allows you to maintain you brand and the appearance of doing everything in-house.
- FlexTax Direct Bank: This option has all of the FlexTax features and benefits, but with the funds housed at your bank instead of PTM’s.
- FlexTax Hosted: We provide the software and training and you do the work yourself. This option gives you additional IT support when you need it and keeps you compliant.
Is it Time to Make a Change?
Providing the best service to your customers requires staying up-to-date – you don’t want to bring a map to a GPS fight! When you rely on the experts, you can move forward with the confidence that comes from having a team of experts making sure you’re never caught short by new requirements or changes in regulations.
Innovators in the industry since 1969, the experts at Payroll Tax Management can take the worry and the work out of payroll tax processing. Scalable technology and customizable solutions means help that continues to meet your needs throughout every stage of your business.
With expertise in more than 11,000 taxing agencies across the country, we’ve got options that can provide all the help you need, whether you need software or you need the advantage of a service that is like having an in-house payroll tax processing department. It’s your call. (But feel free to click instead.)