One big reason for outsourcing your payroll with payroll services is that they will also handle all tax responsibilities. A small business owner especially knows that payroll processing does not stop with paychecks. It requires yearlong preparation of federal, state, and local tax returns, deposits, and detailed recordkeeping. It also requires keeping up with changing tax laws. By outsourcing your payroll services, you no longer need to worry about all that preparation or about late or inaccurate tax filing, since most payroll services assume full responsibility.
Most Payroll Services Provide a Full Spectrum of Tax Services:
- With every deposit, a payroll service deposits social security, Medicare, federal withholding, federal unemployment, state withholding, state unemployment, and, where applicable, disability and local payroll taxes.
- On a quarterly and annual basis, a payroll service files all appropriate returns and then gives you a detailed listing of your tax liabilities with copies of returns for your records.
- Outsourcing a payroll service means you do not have to worry about IRS and state magnetic tape filing and electronic funds transfer (EFT) requirements.
A good payroll service will watch your cash flow, regularly including tax liability deductions and setting aside funds for tax liability expenses that are incurred along the way. The tax benefits that outsourcing a payroll service provides ultimately give your business greater predictability and control over finances.
A good payroll service will also provide you each pay period with a report of Federal tax liabilities, Federal Unemployment Taxes (FUTA), State Unemployment Insurance (SUI), State and local Income taxes.
Dealing with payroll taxes is a job in itself. The benefits of using a payroll processing service goes well beyond paychecks, taking on full responsibility for processing taxes.
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