Do I Need a Payroll Company?

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While on one hand doing payroll in house may seem like a great way to cut costs and keep things close to the company, the harsh reality is that payroll is an extraordinarily complex process that is regulated by fairly stringent legislation.

Employer Solutions Plus wants to help you navigate the pros and cons and aide you in making an informed decision on how to manage your company’s payroll processing.

Risk vs Reward:

Short term savings could end up costing you should there be any issues with the taxation of wages. The IRS regulations around payroll are complex, ever changing, and mistakes are not easily reversed. Not only do these mistakes cost you the value of the mistake (for instance, $1000 in additional wages) but they also result in penalties, fines and should they be large enough may require you to hire counsel and/or an accountant to sort things through.

So let’s assume that you are a CPA who happens to have the knowledge of what it takes to overcome this first challenge. That’s fantastic – on the road to saving some cash. That is if you’re willing to take on the myriad of responsibilities that come with payroll. It is not just writing checks and managing taxes. Payroll administration is not that simple. It often also includes the following processes:

  • State-level Summary Filings
  • Quarterly Financial Reporting
  • Issuing Annual W-2s
  • Processing W-9s
  • Paying out withholdings to government agencies
  • Managing Employee Contributions to:
    • Pensions
    • IRAs
    • 401ks
    • FSAs/HSAs
  • Supplemental Insurance Policies
  • Managing unemployment assessments
  • Handling state disability and family leave assessments
  • Tracking hiring/firing and notifying the government
  • Handling Administrative Wage Garnishments

While this list is long, it’s also demanding, meaning that the individual who handles payroll will have a full time (if not full time plus) job. When you consider the risks of in-house payroll coupled with the cost of bringing on 1-2 employees to manage it for multiple employees, we would wager that it no longer seems like an appealing solution.

Employer Solutions Plus can help you find a payroll processing solution that fits your business needs, size and budget. Contact us today to find out how we can get you on the fast track to better processing!