From oil rig mechanics to glass blowers to pastry chefs, many high-skilled jobs can take years to master.
The people who do these jobs have to develop a very narrow form of expertise.
If you’re new to the payroll business, you probably didn’t go into it with the idea that you would offer glass-blowing services, oil rig repairs or croissants on the side. But it can feel that way when the intricacies of payroll tax processing start coming into view.
Unless your clients are all small businesses who operate exclusively in one jurisdiction and that jurisdiction is not California, New York, New Jersey, Hawaii, Maryland or Virginia, your payroll tax processes can be subject to an incredibly complex – and frequently changing – array of deadlines, requirements and calculations.
Fortunately, you don’t have to be a payroll tax expert to offer payroll tax services to your clients. You can be a payroll expert with the foresight to find the right third-party help for the job of providing reliable, accurate and compliant payroll tax processing.
The Chicken and the Eggs
Every thinking person knows the egg had to come first. Or wait, was it the chicken? The point is you don’t have to be a chicken expert to be able to fulfill your dream of making omelets with farm-fresh eggs. Chicken expertise is someone else’s dream. But by partnering with the chicken dreamers, you can have your eggs and eat them too. The people at Belbeck’s Family Farm, in fact, do exactly that, providing chickens, coops and poultry expertise, so their customers have more time to work on their omelet recipes.
It’s a model of support that doesn’t just apply to the chicken-rental industry.
For new payroll providers or those whose business is growing beyond their ability to effectively manage multi-state payroll tax issues, utilizing a third-party expert can open up a whole new world of opportunity. All of those hours spent struggling and worrying over payroll taxes? Hand them off and focus on your dreams. For eggs-ample:
Even better: The Perfect Omelet in 5 Minutes
If You Think Taxes are a Headache, Try Raising Chickens
If you’ve just started offering payroll, you probably know that getting payroll taxes right is not an option. There’s no margin for error. But, like raising chickens in the backyard, it can seem like a simple matter of putting the right number into the right boxes.
But as many chicken-farming start-ups have had to learn the hard way, things get a lot more complicated as your business grows.
“Chicken math,” as it is known, ranks at the top of the list of things chicken enthusiasts say they wish they had known before starting out. Chicken newbies, it turns out, almost always underestimate the amount of coop space they’re going to need.
In other words: count your chickens.
“The minimum rule of thumb is about 2 to 3 square feet per chicken inside the chicken coop, and 8 to 10 square feet per chicken in an outside run. Skimping on space requirements for a flock of chickens can cause stress, cannibalism, pecking, and sometimes even death.” –Bonnie Jo Manion and Robert T. Ludlow, Gardening with Free-Range Chickens for Dummies
As payroll tax experts, we get it. By which we mean, we understand how easy it is to get in over your head in general, not that we have any particular insight into chicken stress. Even the concept of “chicken math” was new to us, quite frankly, and we’re math people…
The point is payroll taxes have a way of seeming straightforward when you only have a few clients. But when you start to grow, or when they start to grow – especially when it’s across state lines – life gets stressful fast.
Suddenly you’re dealing with questions around employees who live in one state but work in another. Or whose work takes them across multiple state lines.
Q. Why did the chicken cross the state line?
A. It’s not relevant unless the chicken is accompanied by one of your employees. In that case, multistate payroll tax issues may arise.
There are 11,000 state, local and federal taxing agencies across the country, each with their own deadlines, filing requirements and tax rates.
The bottom line? You’re gonna need a bigger chicken coop.
You deserve software and services that grow with you, whether it’s a little help here and there to full-service payroll tax processing. Make sure those services come with decades of experience navigating payroll tax compliance at every level, so you never have to worry about making any mistakes that can lead to fines and penalties or cannibalism.
According to PTM training manager Isabel Preciado, there are plenty of common mistakes new payroll providers can make. In the process of onboarding new clients, she comes across a little bit of everything. Here are some of the struggles new payroll tax clients need help with:
- A client failed to file: With so many separate taxing agencies to manage, it is easy to overlook something like a changed deadline, or in the case of companies experiencing rapid growth, to overlook an agency entirely. A multistate workforce, or a workforce where employees work remotely from another state, brings new tax obligations that are not always easy to manage.
- Incorrect Rates: Deductions for unemployment taxes vary from state to state and are subject to frequent revision. Other state by state payroll tax calculations include family medical and leave provisions, which are being adopted by a growing number of states
- Missing Records or Data: Payroll providers often face the prospect of clients who come to them missing proper documentation about prior tax issues. If an old provider or software is no longer in business, tracking down the needed information may require a bit of old-fashioned, paper-based research.
- Resolving Old Notices: Old notices don’t go away if you ignore them. Under service options that include a power of attorney provision, a third-party payroll tax provider like PTM can contact agencies on your behalf to resolve old notices.
Getting Started with Payroll Tax Management
At PTM, we offer scalable solutions that are customized to your exact needs, alleviating the stress of managing payroll taxes on your own.
Number of state, local and federal tax jurisdictions in the U.S.: Approximately 11,000
Ingredients in a basic omelet: 4 – not including filling
We have a multi-step process of onboarding new clients to determine your exact needs and formulate a solution that works for your business.
“By offering payroll tax software and service, we offer as much or as little as you need,” says Preciado.
A good process is built around creating a partnership in which your processor deals with the nitty-gritty details, so you can focus on your core business.
Knowing Your Needs
Here’s a short list of things to consider when shopping for a new processor:
- Your processor should take time to get to know your business and expectations. How much of the process do you want to manage on your own?
- Your processor should provide education and training for your team. We suggest one hour a week, typically for eight to nine weeks. This comprehensive education provides guidelines on when to upload the payroll tax information, the necessary documents involved, and more.
- Your processor should work directly with you through at least one quarter-end to ensure you have your part of the process down.
Customized Solutions Go Beyond Basics of Tax Management
The customized nature of payroll tax processing solutions makes it easy to change the level of your service, whether you want to take on more of the work yourself or leave more of it to tax compliance experts. Many clients often begin a PTM partnership with a lower level of payroll tax assistance but increase it as their business grows and their needs – and the needs of their clients – become more complex.
Just as Belbeck Farms can help with the more granular aspects of your backyard chicken farming operations, PTM provides service, expertise and time savings to companies who would rather prioritize their core business than have to become experts in payroll tax compliance.
As an added benefit, when quarter-end or year-end approaches and all those other payroll providers are running around like you know what, those of you who have a third-party payroll tax experts are kicking back and enjoying the peace of mind that comes from having a reliable payroll tax partner to get them through.
After all, there’s more than one way to enjoy a chicken. We’re not judging.
And there’s more than one way to run a successful payroll business.
Want to learn more about your options for avoiding the stress of payroll tax management and compliance? We are here to help. Don’t be chicken! Call us or click on the link below for more information.