One of the more intimidating things about running a business is hiring and paying your employees. Core Financial Outsourcing, Inc. works with businesses in various industries and one of the most common questions we get is, how do you feel about payroll companies? Is their service worth it? Short answer: YES. Long answer: I work in a firm of 25 accountants all with varying degrees, certifications, and experiences and we don’t even process our own payroll. We use a payroll service! Why? We practice what we preach…focus on what you do best and outsource the rest.
Let’s start with what is involved in processing payroll and the payroll processing company’s responsibilities:
Calculate Hours/Salaries/Deductions Business owner
Report them to Payroll Service Business Owner
Calculate the following taxes: Payroll Service
FICA
Social Security
Medicare
State Withholding (can be various)
City Withholding (can be various)
Local Withholding (can be various) – where business is located
Local Withholding (can be various) – where employee lives
Cut checks/process direct deposits after withholding taxes/deductions Payroll Service
Maintain tax liabilities for the various Federal/State/City/Local tax agencies Payroll Service
File quarterly tax returns with the various tax agencies Payroll Service
Submit quarterly tax payments to various tax agencies Payroll Service
File annual W3 and W2’s with the IRS Payroll Service
As you can see, the payroll service takes over a lot of the process. Along with this, they assume the liability with processing, filing and paying the various tax authorities. The saving in time clearly out ways the expense of the service. The amount of time that you would spend calculating, completing, and filing with these agencies could be spent growing your business, and if something is filed wrong you don’t have to worry about it. The fee they charge is well worth the peace of mind.
When you process payroll, most services will impound the appropriate taxes and they will hold it and submit when it is due. This is helpful because you don’t have to keep money in your bank account that is technically already spent, or is owed to the government.
I know that Intuit’s payroll service is a lot cheaper than most payroll services, and this is because they DO NOT impound the taxes for you. They will calculate how much you owe, but they do not file or pay any of the taxes due to the various agencies, making you liable. So that is something to keep in mind when you are shopping around for a payroll service.
