When a company is growing, it often presents employers with a host of what's considered "good problems" to have. You now have an office full of employees—and the headaches that come along with that: figuring out each person's tax liability based on their W-4 forms, calculating overtime for nonexempt staff and more.
A popular option for small businesses in this stage is to outsource their payroll and tax withholdings to a third party vendor. Here are some of those advantages:
- It frees up your time to do other things, like product development, sales and marketing.
- You don't have to become an expert. Managing payroll requires specialized knowledge and there are a lot of pitfalls that can lead to regulatory nightmares.
- You don't have to depend on one employee. Even if you have a staff member handling payroll, if that person suddenly leaves or is absent for an extended illness, you'll find it nearly impossible to bring someone in immediately to take over. Meanwhile, problems will crop up.
- You can actually save money by outsourcing. Let's say you and perhaps a staff member—both untrained in the nuances of payroll—incorrectly file paperwork. Before you know it, you could find yourself hit with penalties ranging from $500 to $1,000. The penalty costs will soon be higher than outsourcing would've been in the first place.
Of course, some companies try to save money by handing payroll over to an outsourced administrative assistant, who may be organized but unfamiliar with payroll rules. But you're still not off the hook. Even if this assistant makes a mistake, in the eyes of the law, you're still responsible as the employer. An outsourced payroll provider not only gives you the ability to work with experts who understand all the rules, but it also helps absolve your organization of some liability.
To find out a little bit more about what the IRS requires, have a quick look at the payroll section on the IRS website. If nothing else, it should convince you this is one task you don't want to take on all by yourself. Get in touch with us and we'll be happy to have a no-obligation talk about your particular situation and how qualified outsourced payroll solutions can help—no matter how small you are today or how big you'll be tomorrow.