Outsourcing Payroll Duties

Outsourcing payroll responsibilities can be a sound organization practice, however … Know your tax obligations as a company

Many companies outsource some or all their payroll and related tax responsibilities to third-party payroll service suppliers. Third-party payroll service providers can improve service operations and help meet filing deadlines and deposit requirements. A few of the services they provide are:

– Administering payroll and employment taxes on behalf of the company where the employer offers the funds initially to the third-party.
– Reporting, collecting and depositing employment taxes with state and federal authorities.

Employers who outsource some or all their payroll duties ought to think about the following:

– The company is ultimately responsible for the deposit and payment of federal tax liabilities. Even though the company may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable party. If the third-party fails to make the federal tax payments, then the IRS might evaluate penalties and interest on the employer’s account. The company is accountable for all taxes, penalties and interest due. The employer may also be held personally responsible for specific unpaid federal taxes.
– If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS highly suggests that the company does not alter their address of record to that of the as it might substantially limit the company’s capability to be informed of tax matters including their business.
– Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is made using Electronic Federal Tax Payment System (EFTPS). Employers ought to guarantee their payroll providers are utilizing EFTPS, so the employers can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and utilize this PIN to occasionally validate payments. A warning should increase the first time a service provider misses out on a payment or makes a late payment. When an employer registers on EFTPS they will have online access to their payment history for 16 months. In addition, EFTPS allows companies to make any extra tax payments that their third-party company is not making on their behalf such as estimated tax payments. There have actually been prosecutions of people and companies, who acting under the appearance of a payroll company, have stolen funds meant for payment of work taxes.

EFTPS is a safe and secure, accurate, and easy to utilize service that supplies an instant confirmation for each deal. This service is used totally free of charge from the U.S. Department of Treasury and allows employers to make and confirm federal tax payments digitally ۲۴ hr a day, 7 days a week through the web or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for a registration type or to talk to a customer support agent.

Remember, companies are eventually accountable for the payment of earnings tax kept and of both the employer and worker portions of social security and Medicare taxes.

Employers who think that a costs or notice gotten is a result of an issue with their payroll company must get in touch with the IRS as quickly as possible by calling the number on the costs, writing to the IRS office that sent the expense, calling 800-829-4933 or visiting a local IRS office. For more details about IRS notifications, expenses and payment options, describe Publication 594, The IRS Collection Process PDF.