I have always been a big proponent of small businesses focusing on what they are good at. Their trade! So it makes me cringe when business owners think they can just punch numbers into Quickbooks and print out their employee checks. While most pet sitters are busy caring for the pets, keeping up with payroll taxes could be a full time job! There are SO MANY laws that are constantly changing and it isn’t always as simple as filing State, Federal, and 940 (federal unemployment), and 941 (social security, medicaid, and employee federal withholding) taxes. For instance:
Do you know the difference between filing your taxes the ACH Credit v Debit Method and which one benefits your business?
Do you know what Washington’s L&I Tax and if and when you have to pay it?
If you did your taxes last year did you keep up with the changes and your responsibilities for the The Hire Act Credit, the Cobra Credit, the Making Work Pay Tax Credit, Social Security tax credit, plus numerous state and local changes?
This can all be incredibly confusing and time consuming!
The penalties, fines, and interest if not done properly could be more costly then your mistake! As a small business owner, you need to focus on what you do best. grow your business! And now, to break all of this down let me please introduce you to Alexia, from Payroll Experts:
Why it is so important for a business to have a payroll company?
Payroll is most often the largest liability of any organization, large or small. It is imperative that it is handled correctly and on time, or a business owner could be facing thousands (or tens of thousands) of dollars in interest and penalties. Outsourcing the processing of your payroll and tax filing is a smart decision when working with the right organization. Be sure you are partnering with an IRS Registered Reporting Agent and beware of companies who bundle your employees with other employees. You’ll want to be sure that they are paying your taxes under YOUR federal and state ID numbers. Preferably, you should look to work with a company who utilizes the ACH debit method when paying the IRS as this allows you to confirm your tax deposits immediately unlike the popular ACH Credit Method.
What taxes do you file a business’ behalf?
Payroll Experts handles all payroll related taxes including 941, (social security, medicate and employee federal withholding), 940 (Federal Unemployment), and all state withholding and local payroll taxes, in addition to certain states special labor and industries taxes like Washington’s L&I tax typically not handled by most payroll services.
How often do things change?
Payroll tax law can change at any time with little to no notice. It can even require retroactive calculations from prior periods. In the past two years, here are a few tax law changes that affected payroll calculation: The Hire Act Credit, the Cobra Credit, the Making Work Pay Tax Credit, Social Security tax credit, plus numerous state and local changes. Did you know that Pennsylvania has over 3,200 local taxes that are expected to be handled through payroll? While that is an extreme case, many states have similar concerns including reciprocity and changing tax rates mid-year.
What happens if the business tries to do it themselves and messes it up? (Doesn’t file on time… etc)
Many companies tell themselves, “I only have a couple of employees; I can just handle it in Quickbooks and save the cost of outsourcing.” While it is true that there are “in-house” programs like Quickbooks that have payroll calculation functionality in them, the unfortunate side of that option is that the software will not stop you if you are doing something incorrect like blocking a tax that you shouldn’t be, etc. Furthermore, if handling it “in-house”, one must stay on top of making their federal and state deposits through the IRS EFTPS (Electronic Federal Tax Payment System) and their corresponding state’s websites or coupon books. This means multiple websites, logins and passwords, all tied to tax due date and time deadlines that if missed, result in escalating penalties and interest (oftentimes more costly that the initial payment due itself). The bottom line is, for the cost of a good lunch, you can ensure that you have a professional who is an expert in payroll and tax law handling this for you and taking the liability and responsibility completely off of your shoulders.
When do you deposit my withholding to the government? Monthly? Quarterly? What exactly are you sending in?
Since the liability for the payroll taxes is actually created once the pay period is over, Payroll Experts will calculate and conveniently debit your chosen account for the exact amount of the payroll taxes due when we process each payroll. We deposit the Federal and state withholding taxes on a Semi-Weekly basis and pay smaller taxes like the Federal and State Unemployment quarterly or annually depending on the required depositing frequency. What this means for you is we calculate and pull exactly what you owe for each payroll leaving you with no reconciliation and no surprises at the end of a year or quarter. We also file the required quarterly and annual returns that allow the Federal and State governments to reconcile the deposits we sent them throughout the quarter. This allows you to do what you do best: grow your business!
If this got your juices flowing and your questions going, I want to encourage you to reach out to Alexia. She is very friendly and willing to answer any of the questions you may have on the phone. She is one of my “team” members and one of the MANY resources my coaching clients re connected with when we work through the Employee Quick Start Program together.
Alexia Matak, CPP
Director of Sales and Marketing
If you can manage to stay on top of all of this information, my hat if off to you! Although there is only so much time in the day and I recommend you choose what you do with it wisely. There are things that are going to help you grow your business and things that are going to suck you dry.