Payroll processing is typically the first business operation that is handed to an outsourcing company. The reasons vary – many business owners fear they might not be able to comply with federal and state payroll standards or while many have other important matters at hand to look after.
Regardless, there are many advantages to outsourcing payroll processing to a competent and expert third party accounting service.
Outsourcing Your Payroll Operations – When to Choose This Service
When is the right time to outsource payroll processing? Why should you do it in the first place?
You need to identify a number of factors that can answer this question, such as number of employees, whether the company has a local entity or not, and complexity of laws regarding employment.
The cost and time given when setting up and administering a local payroll processing system cannot be justified in many cases. This is when it makes more sense to outsource this business operation to a third party payroll processing service.
An Important Financial Component for Your Business
It is an essential component of your business, mostly because of the serious impact on your business’s finances. Payroll processing is ruled by several laws and regulations that must be followed. Another reason is the legal and even ethical ramifications involving payroll operations within your business.
What can outsourcing payroll operations get for you?
On Time and Accurate Payment
U.S. federal law dictates that businesses and organizations must pay employees in a timely and accurate manner. A systematized payroll system can take care of the requisite.
The U.S. Department of Labor, Wage, and Hour Division provides established guidelines that offer information about everything, from minimum wage, minimum paydays, overtime pay requirements, which deductions are allowed and more.
A business that fails to comply with these laws will be forced to pay back wages (of the employee), a waiting time penalty, attorney fees, liquidated damaged, and can even face civil or criminal penalties according to state law.
Accurate Withholding and Filing Taxes
As per federal government requirements, all businesses must withhold a percentage of a paycheck for both employee and employer. This amount goes into paying for social security of the individual as well as Medicare, unemployment benefits, and Federal Income Tax.
Additionally, employers are also required to pay state income taxes as well as unemployment and disability taxes. The employer is liable for paying penalties, a tax lien or levy against taxpayer’s property as well as tax audits upon failure to comply with these requirements.
You can make sure all the above requirements are met by outsourcing accounting and payroll operations to A&B Accounting & Business Solutions. You can also take advantage of our business consultation and other resources.