I need help managing payroll!
By: Valerie Briley, CPA, Founder & Chief Business Driver, Reveal Business Solutions
“I just want a little help managing payroll.”
I hear this a lot from small business owners, and given how complex payroll can be, it’s no surprise. Applying the proper wage withholding, filing the correct tax forms, and making sure you get the W2s out on time are tedious tasks with potentially costly consequences.
It’s not unusual for us to hear from a small business owner who asks for help after receiving a letter from the IRS about a payroll tax problem. Even if a new client isn’t here because of payroll issues, during their onboarding process we often find mistakes in their payroll records, things like not filing a form on time or not paying the right tax. Just one error can lead to your business being non-compliant and can cause you to have to spend your time dealing with the IRS instead of running your business.
THERE IS A MUCH EASIER WAY TO MANAGE PAYROLL!
Outsourcing Payroll Saves Time and Improves Efficiency
My advice to small- and medium-sized business owners is to simplify their payroll process by outsourcing it. When you outsource payroll with Reveal Business Solutions, you’ll get set up with payroll software that’s efficient and increases accuracy. Employees will be paid by direct deposit, which employees prefer, and you save time by eliminating the need to print and distribute checks. The software calculates all the taxes and automatically files them, so you don’t have to worry about making mistakes or missing deadlines.
An automated system reduces the potential for error at every step in the process. New employees can onboard themselves by completing an online form instead of filling out paperwork that you then have to deal with. Keeping track of hourly employees is no problem, and if you offer benefits such as paid leave, health care, or a 401(k) plan, the software can manage all of it!
Why Outsource When You Can Buy Payroll Software and Do It Yourself?
You could go ahead and buy payroll software and implement it yourself, but I recommend outsourcing the entire process. When you outsource, you benefit from having an expert set up the software for you and make sure it’s running correctly. The software we work with is extremely robust and when correctly implemented, it can be transformational for your business, helping you attract and retain talent, send overtime alerts, and generate project tracking and cost reports. We also set it up to integrate with your accounting software, so it synchronizes and streamlines your financial reporting.
The bottom line? By outsourcing, you free yourself from a huge administrative burden and have more time to focus on growing your business. You also get the benefit of knowing you’re in compliance with current legislation. Here are a few examples that show how easy it can be for business owners to unknowingly violate employment laws:
- Employees Working in Various States
These days, especially considering COVID challenges, many businesses have discovered that working virtually works for them. It frees them from geographic constraints that once limited who they could hire. As a result, some small business owners now have employees spread out across multiple states. This is a great development from the standpoint of productivity, but it complicates payroll. Employees’ taxes are based on where they live, not where the employer is based, and it’s the employer’s responsibility to know the tax requirements for each jurisdiction. Tax laws vary from state to state, and sometimes, from county to county or city to city. Apart from taxes, there may be other state employment laws that need to be followed. For example, California recently enacted legislation that requires businesses to provide 48 hours of paid sick time per employee, per year. If the requirement isn’t followed or the sick time isn’t properly tracked, an employee can file a complaint.
- Contractor vs Employee
It can be tempting for a business owner to pay someone as a contractor rather than hire them as an employee to avoid dealing with payroll taxes, unemployment insurance, or benefits. Some small businesses opt to pay all employees as contractors simply to avoid the hassle of payroll. However, there are rules for what qualifies as a contractor versus an employee, and if the government thinks your contractors are really employees, you could be audited. If the audit concludes you’ve misclassified workers, you could be on the hook for all their payroll taxes.
- Keeping Up with Compliance
There are a lot of compliance requirements that many employers aren’t even aware of. For example, the Department of Homeland Security requires all employees to fill out an I-9 form to verify their identity and legal authorization to work in the United States. This applies to all employees in the US, both citizens and noncitizens. Failure to submit the form, or submitting an I-9 form with errors, can result in heavy fines and penalties, even if the employer didn’t hire an unauthorized person.
These are just a few examples of the issues we’ve seen that can be eliminated by outsourcing payroll. For a cost that is a very small fraction of the potential fines you could face if a violation occurs, you can rest easy knowing your payroll is well-managed, your employees are taken care of, and your business is fully compliant.
If you’d like to learn more about the benefits of outsourcing your payroll and people advisory services and how it might work at your business, schedule a discovery call with our team at Reveal Business Solutions. We partner with business owners around the country to support their growth and ensure the profitability of their businesses. We’re ready to put our experience to work to help ensure your future success!