Adding payroll services to your suite of offerings can be a great business move. But it doesn't come without a few pitfalls.
As president and CEO of Forensic Payroll Consultants, Andrew Lopez has seen a lot of them.
While Lopez built his business around helping payroll providers find and correct errors, he is a strong advocate of taking steps to prevent errors in the first place, with practices to keep your payroll processes compliant and trouble free.
Among other steps you can take, Lopez says the proactive approach includes becoming familiar with some of the most common ways that new payroll providers can find themselves in trouble. And payroll trouble can have expensive consequences, including fines and penalties. Here are a few of the errors Lopez sees most frequently:
Common Mistakes Made by New Payroll Providers
- Failure to obtain all of the information they need from a prior payroll provider
- Inaccurate tax accounting for payroll deductions like insurance payments or retirement contributions
- Mistakenly including things like mileage reimbursements as wages
- Not reaching out for help or guidance
The Right Questions for Avoiding Payroll Tax Errors
One of the best ways to avoid such problems, Lopez says, is to make sure you're asking the right questions of your clients: Is a benefit pre-tax or post-tax? When did it start? Who participates? Is it a flat amount or a percentage? Is it retroactive?
Lopez says many payroll providers get into trouble because they don't know what they don't know. "Some providers don't have the technology or the expertise," he says. "Others are small companies processing their own payroll or very small clients who still process in QuickBooks or on paper."
The good news is that there is help, in the form of technology, expertise and professional associations like the American Payroll Association (APA) or the Independent Payroll Providers Association (IPPA).
Lopez says while many of his clients come to him with penalties in hand, others are proactive, hiring Forensic Payroll as a consultant to help them establish best practices and to provide them with a check list of things to do and things to ask when onboarding a new client.
Forensic Payroll Consultants can also act as a "bridge" between a previous payroll provider and a new payroll provider, making sure to unearth any issues that could carry liability forward, Lopez says.
Lighten the Worry with Payroll Tax Expertise
At Payroll Tax Management, we can help by providing the heavy lifting for payroll's biggest challenges, streamlining the process of getting your payroll taxes paid and filed correctly, on time and in compliance with taxing authorities, whether you are dealing with one state or 50 states. We can help ensure payroll tax compliance with federal, state and local agencies.
Our clients also have access to additional solutions through our sister companies, SBS Payroll, Cachet Financial Services and Time Rack. Together, along with partners like Forensic Payroll Consultants, we are committed to providing the industry with solutions across the entire landscape of compensation issues.
Call us or click on the link below to learn what we can do to error-proof your payroll tax processes. You can also join us at the IPPA's Sales & Marketing Conference Feb. 25-27 in Las Vegas. We'll be there along with our sister company Cachet.