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Many small-business owners choose to use a payroll tax service to provide payroll processing, payroll tax withholding services and to submit payroll tax payments on their behalf. While some small businesses certainly do an excellent job of handling and processing payroll taxes in-house, there are times when you using really might want to consider choosing an outside company for your payroll tax service needs.
When You Need a Payroll Tax Service:
When You Can't Do It Yourself - Although computer-based software accounting and tax applications have made handling payroll task much easier than they were in the past, many small-business owners simply are not comfortable with calculating payroll taxes on their own. If this is the case, then using a payroll tax service or outside professional accountant to handle your payroll taxes is always an excellent idea.
Too Many Employees - Even if your small business has an in-house accountant or bookkeeper, there may be times when your business grows to such a level that performing payroll services may simply be too much for one or two individuals. If your small business has reached the point that it has more than 10 to 20 employees, your in-house bookkeeper probably has plenty of other accounting tasks to keep him/her busy.
Even with the aid of good accounting software, calculating state and federal withholding taxes, Social Security payments as well as other employee deductions may cost you more in labor by using your in-house accountant or bookkeeper than using an outside service. Also, the amount of time needed to properly administer payroll and payroll taxes for a large number of employees is significant, and may keep your in-house bookkeeper away from other important accounting related tasks.
Missing Payroll Tax Deposit Dates - A very common and critical sign that your small business needs to consider using an outside payroll tax service is if your business is beginning to miss mandatory payroll tax deposit dates. With the day-to-day task of running a small business, it is easy job to overlook a payroll tax deposit date and make the deposit late. When payroll tax deposits are made late, you always incur some sort of penalty or late charge. If this happens even once, you might want to consider getting some outside help. An outside payroll tax service will always help to remind you to make timely tax deposits, and help free up more of your, or your bookkeeper's, time by doing all the necessary paperwork for you.
Avoiding Costly Calculation Errors - While many small businesses are quite adept at calculating payroll taxes, there is always the chance for calculation errors and mistakes. For the most part, companies that specialize in payroll tax services offer a guarantee to the accuracy of the calculations and filings that they perform. State Departments of Revenue and the Internal Revenue Service generally do not forgive tax debt penalties and fines based on calculation errors, and holding an outside company accountable for errors can help reduce penalty and find payments if and when they occur.
