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Outsourcing Payroll Duties
kellishillings edited this page 1 month ago
Outsourcing payroll responsibilities can be a sound business practice, but ... Know your tax responsibilities as a company
Many companies contract out some or all their payroll and associated tax tasks to third-party payroll provider. Third-party payroll company can streamline company operations and help satisfy filing deadlines and deposit requirements. Some of the services they provide are:
- Administering payroll and employment taxes on behalf of the employer where the employer offers the funds at first to the third-party.
- Reporting, collecting and transferring work taxes with state and federal authorities.
Employers who outsource some or all their payroll duties need to think about the following:
- The company is eventually responsible for the deposit and payment of federal tax liabilities. Although the company may forward the tax totals up to the third-party to make the tax deposits, the company is the responsible celebration. If the third-party stops working to make the federal tax payments, then the IRS may assess charges and interest on the employer's account. The employer is liable for all taxes, penalties and interest due. The company may likewise be held personally responsible for certain unpaid federal taxes. - If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS highly suggests that the company does not alter their address of record to that of the payroll service supplier as it might substantially restrict the company's capability to be informed of tax matters involving their service.
- Electronic Funds Transfer (EFT) should be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers should ensure their payroll providers are utilizing EFTPS, so the companies can validate that payments are being made on their behalf. Employers must register on the EFTPS system to get their own PIN and use this PIN to occasionally confirm payments. A warning must go up the very first time a provider misses a payment or makes a late payment. When a company registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables employers to make any extra tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and companies, who acting under the look of a payroll provider, have actually taken funds meant for payment of employment taxes.
EFTPS is a secure, accurate, and easy to use service that offers an immediate confirmation for each transaction. This service is offered totally free of charge from the U.S. Department of Treasury and permits companies to make and confirm federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more details, employers can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration type or to speak with a client service representative.
Remember, companies are ultimately responsible for the payment of earnings tax kept and of both the company and staff member parts of social security and Medicare taxes.
who believe that a costs or notification received is a result of an issue with their payroll company ought to contact the IRS as soon as possible by calling the number on the expense, composing to the IRS office that sent the expense, calling 800-829-4933 or checking out a regional IRS workplace. To learn more about IRS notifications, costs and payment options, refer to Publication 594, The IRS Collection Process PDF.