Payroll tax reporting is a complex subject and, if not done correctly, opens your business to a host of potential penalties and interest. If it seems overwhelming, you may want to consider a payroll tax outsourcing solution. Hiring a third-party processor puts payroll tax activities in the hands of an expert. When evaluating a payroll tax processor, make sure the service holds a crime bond and secure processes in place to protect your business and client data. Also, look for a service that uses EFTPS and provides electronic confirmation and/or access to your payment history online.
In addition to federal payroll taxes, each state has its own set of reporting requirements, including report for state withholding and unemployment taxes. Consult with the state tax agency and/or your payroll tax expert regarding these payroll tax reporting requirements. It cannot be stressed enough that payroll tax reporting is one of the most critical record keeping issues your business faces.
Companies who outsource payroll tax processing to third-party processors do so for many reasons; including maintaining payroll tax compliance, saving on penalties and interest, and eliminating the confusion of staying up to date with the ever changing payroll tax laws.
Payroll tax processing is an entirely different language to many businesses. As a payroll professional, have you ever felt like these two in the classic 1945 video, “Who’s On First”, when trying to discuss and understand your payroll tax responsiblities with clients or taxing authorities?