Payroll – Avoid the Pain

You’ve probably heard someone say about a task they needed to do, “I’d rather have a root canal.” Unfortunately, for many companies that is how the payroll process is viewed. It doesn’t have to be that way.

A Critical Question

Why are you in business? Unless you are a payroll company, it is doubtful you said, “We’re in business to process payroll.” No, in fact payroll is probably viewed as more of a necessary evil. It’s not that you don’t value your employees. It is more that payroll has to be done but preparing it really adds nothing of value when it comes to why you are in business. On the other hand, don’t do payroll and you will have a big problem. But still, payroll can be a huge headache.

A Better Way

Unless you truly like preparing payroll or have a highly unique situation, your time is probably much better spent doing things that will move your business forward. If you are not already using a payroll service, I encourage you to look into that now. You may have full-blown accounting and human resources departments, but there are better things they can be doing.

Payroll is a Specialty

Unless you spend significant time staying current, it is highly unlikely you will be up to date on current payroll regulations, particularly when it comes to payroll taxes. The temporary cut in the social security tax rate is an example of a change that I am certain some companies managed to miss. As a result they incorrectly calculated taxes. Besides just rates, what about the changes in the taxable income limits for social security or state and federal unemployment taxes? Do you have all the correct documentation for employees? These are all things that must be monitored constantly. If you prepare payroll in-house, you must stay on top of these things. Payroll processing companies make it their business to stay current with regulations.

More Benefits

I have already mentioned the correct calculation of payroll and related taxes as a benefit of using a payroll tax service, but there are other benefits as well. These services are adept at setting up direct deposit of pay checks, They also can make payroll tax deposits and file quarterly and annual payroll tax returns for you. It is comforting to know that someone is making certain that all this is done in a timely manner to avoid penalties. When you withhold taxes from employees, you have a fiduciary responsibility to remit those taxes at the correct time. Failure to do so can result in significant tax penalties and even personal liability for owners, officers, and those with check signing authority. It is not an area to take lightly. A good payroll service takes on this responsibility for you.

In addition to payroll and payroll taxes processing, a good payroll company often offers other services. Examples include maintaining accurate records for retirement plans like a 401k and maintaining human resources records. Again, these are areas where there are laws that govern what must be done. You can be more at ease knowing that someone with this specific expertise is making sure your company remains in compliance.

The bottom line is if you are not at a minimum outsourcing your payroll, you are very likely not making the best use of your time and resources. So don’t burden your company with tasks that can be handled more cost-effectively and accurately by a company that specializes in these areas. Find and use a good payroll service.

If you want to know more or need some recommendations, contact AimCFO – Contact

As always, your comments are welcomed.

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