When a small business has only a few employees, it might seem like running payroll in-house is the most logical and time-saving business move. But when you think about the tax regulations, legal considerations…not to mention the actual time it takes to facilitate the process, tackling payroll yourself might not be the best option.
Mistakes can happen a bit more easily when carrying out an essential business function that isn’t quite your expertise. For example, the owner of a mom and pop pizza place makes the best marinara sauce around. They are super successful, but they don’t have the time to learn all of the payroll laws that pertain to them, let alone keep up with the changes to those laws. These business owners then end up doing payroll and taxes after hours because they have to serve their clients during the day, equaling less personal time for them.
Depending on how complicated your actual payroll is, you might think some items on the following list to feel all too familiar.
These are some of the most common errors that I’ve seen when small business owners or HR managers do payroll themselves:
1. Not understanding overtime and other labor laws in their state
2. Misclassifying employees (employee vs. independent contractor)
3. Incorrect taxes withheld for employees (state/SUI/local setup)
4. Late or incorrect deposits
5. Not understanding pre-tax/post-tax earnings and deductions
According to the NSBA 2015 Small Business Taxation survey, payroll taxes were ranked as the no. 1 most burdensome tax among small businesses. But there is a solution to this headache.
Working with a trained payroll professional with access to many tax and compliance resources can help small businesses eliminate those errors.
Tax professionals also have working relationships with the tax agencies so penalties may be prevented or certainly resolved easier and more quickly.
Items like workers’ compensation, benefits, time and attendance and retirement plans can all be integrated with a payroll system which leads to saving more time and effort as well as preventing potential errors within those tasks as well.
Handing off your payroll processing tasks to a professional is a crucial decision that must be made with much consideration. This eBook will help guide you to the right choice for your small business.