Outsource Your Payroll Headaches
 By Lee S. Shaffer

Most small employers agree: Payroll is a hassle and a headache.

Big corporations have bookkeepers and accountants who can handle:

• Cutting paychecks
• Calculating and withholding employee taxes
• Making deposits for payment of Social Security, Medicare and income taxes
• Reporting tax information to the state and federal governments

Small employers must carry out those same responsibilities, but without the help and expertise that big companies have at their fingertips.

Enter third-party payroll service providers, firms that handle all of the payday nuts and bolts for small employers. Here's what you need to know to successfully outsource payroll to one of these companies.

Services Provided
Payroll firms offer a variety of services at a variety of prices. That makes it easy to outsource all or some of your payroll duties, depending on your budget.

For example, payroll service companies can administer payroll and employment taxes for you, with you providing the funds to the payroll firm.

They can calculate, report and deposit employment taxes with state as well as federal agencies.

Some firms will also oversee worker's compensation insurance for small employers.

Advantages For Small Employers
Payroll service providers can take the hassles out of dealing with paydays and tax reporting requirements.

These firms can ensure that your payroll taxes are deposited on time and in the correct amount. The companies can also ensure that the proper tax forms are filed on time.

Bottom line: They can streamline your business operations and free up your time so you can focus on what you do best—running your business.

Your Responsibilities
If you choose to use a third-party payroll firm, you're still responsible for the timely deposits and payments of your tax liabilities. This holds true even if you forward tax amounts to the firm to make tax deposits on behalf of your small business.

If the payroll firm doesn't make your federal tax payment, the Internal Revenue Service may assess penalties and interest on your account—and you'll be liable for those costs, too.

In addition, if there are any questions or issues with your business account, the IRS will send correspondence to you at your address of record—not to the payroll firm. For that reason, the IRS recommends that employers not change their address of record to that of the payroll service provider. Changing your address of record might significantly limit your ability to be informed of tax matters.

AFS Can Help
As an AFS Member, you have access to one of the top payroll services in the U.S.—ADP EasyPay.

ADP EasyPay was developed specifically for small and emerging businesses just like yours. AFS Members enjoy discounted rates on services such as:

• Calculating, depositing and filing payroll taxes
• Direct deposit
• Time clocks and electronic timesheets (integrated with payroll)
• Pay-by-Pay Worker's Compensation Insurance

ADP offers flexible reporting via fax, phone and Internet. Plus, the company assumes liability for timeliness and accuracy of payroll tax deposits and filings.

Let ADP help you save time and money by handling your payroll taxes and paychecks. ADP EasyPay is the cost-effective and efficient payroll service that will take the headaches out of every payday.

Still not sure if a payroll service firm is right for your small business? Talk to the online certified public accountants at ProTax.

They can answer your questions about payroll taxes and other tax issues at no additional charge. Get the confidential and complete answers you need within two business days.



(Posted September 2011)

>>More Owner's Manual Articles