The Pulitzer Prize winning author and columnist Dave Barry once said, “We’ll try to cooperate fully with the IRS, because, as citizens, we feel a strong patriotic duty not to go to jail.” While said in jest, his words truly underscore how serious the IRS is about compliance. If you own a business and run afoul of the IRS, there might not be jail time in your future, but there will likely be fines. In fact, 40% of small to mid-size businesses are forced to pay monetary penalties to the IRS due to incorrect payroll filings. The average penalty is a payment of $845. Chances are, you didn’t become a business owner to deal with payroll. But the fact is, payroll is a critical part of your business, even though it can merely seem like a necessary evil. You could hire someone in-house to handle your payroll services, but that will likely be at best inefficient, and at worst inaccurate. You should let professionals handle your payroll, because they have specialized skills, knowledge, and experience that will make the process painless. But with so many different payroll companies available, what kind of services should you look for? Here is what to look for when choosing a payroll service.
Automatic Tax Filing
One of the main perks of hiring a payroll service is having the professionals handle every aspect of your company’s taxes, from calculations, to withholding, and even filing. It is the payroll company’s job to be well-versed in local, state, and federal tax codes (including any recent changes) and to make the proper deductions and withholdings. You could inquire about the software being used and ask whether it automatically makes the proper deductions, automatically files the taxes, and if it can factor in special deductions like 401(k), HSA, and garnishments.
Payroll services keep and have access to massive amounts of sensitive employee data that, in the wrong hands could be used for nefarious purposes. Therefore, the security of that data is of paramount importance. You owe it to your employees to take appropriate measures to ensure that their data is safe. This could mean asking potential payroll services how they store their data, what security measures they use, and checking to see if they’ve had any recent data breaches.
Your business will likely be forced to use some type of accounting or tax program on your computers, regardless of whether you hire a payroll service or not. Depending on your industry and salary structure, you might also use time-tracking software. One of the main benefits to having a payroll service is the streamlining of the tax preparation process, and whatever type of software the payroll company uses needs to work seamlessly with what you have on your own system. This means that you should not be forced to manually enter massive amounts of data, and that the software should be able to perform those tasks. This would cut down on the number of mistakes while also freeing you up to actually run your business. If you need reassurance, you can ask any potential payroll service specifically how their software is able to work with whatever tax and accounting programs you already have.
While a payroll service has the capacity to be particularly useful, it is actually quite an involved and intricate process with a lot of moving parts. You will inevitably run into problems, and when you do, the right customer service representative can help you and put your mind at ease. So, how do you decide if a company has customer service that will fit your needs? There are a few steps you can take. First, you could check reviews online of the potential payroll service. You can check if there are negative reviews and if there is any response to them. Second, you could ask about the business backgrounds of the customer service representatives. If they have experience in your industry, they will likely be able to solve your problems quicker and better than those unfamiliar with your industry. And third, you should consider what level of customer support you require. Would online support suffice? Or would you want to be able to speak to a human being at any hour of the day? Here you should consider your personal preferences.
If you run your own business, there’s a high likelihood that you don’t want anything to do with payroll. To wit, 40% of small business owners claim taxes and bookkeeping are the worst part of owning a business. But your employees, who make up the lifeblood of your business, need to be paid; correctly, and on time every time. Should you wisely choose to leave payroll in the hands of professionals, there are four factors you should consider when choosing a payroll service. You should make sure the company has automatic tax filing, ample data security, smooth software integration, and exceptional customer service. Because you don’t want to do taxes, and you shouldn’t have to. You want to and should be able to run your business as best you can.
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