Often considered a headache by many business owners, payroll does indeed come with many challenges. If you are trying to do it yourself then you already know what we’re talking about. There seem to be a million different laws and bits of knowledge required to handle the daunting task of paying someone for the work they’ve completed. This is just getting more complicated every year with things like health reform, employee payroll tax credits and more. Even if you have an accounting degree, you still have to find time every week (or every other week) to accomplish the task accurately. As your business grows and you find yourself running wild to get everything done, one of the first items many business owners like to take off their plates is payroll. When you finally decide to make a change and hire someone else to handle payroll for you, you are looking at several different options. One of the first decisions is whether to hire an in-house accountant or an external service. This decision is crucial to the success of your business and should not be taken lightly.
When you hire an in-house accountant to take care of payroll, it comes with the benefits of having some level of control over the process. However, this control comes at a substantial price. The risks and liabilities completely rest on your shoulders. If you happen to have hired an accountant who likes to cut corners this could become very costly both in time to fix and penalties to pay, very quickly. Another aspect you may have overlooked in making this decision is the costly software purchases and renewals needed to give the accountant the tools needed to do their job accurately. Between the accountant’s salary, the equipment they require and the space they occupy, this option can prove to be a rather expensive.
An outsourced payroll services is another option and one we at VAST highly recommend. A payroll service eliminates the need for you to pay another employee’s salary, purchase accounting software and provide them with a workspace. Payroll services are also often a much safer option, as these companies are specifically trained to process payroll and deposit taxes timely and accurately. Additionally, the fees they charge are often very reasonable.
You do need to do your homework to ensure you engage with a reputable competent payroll service. Even if you hire a payroll service, the liability for the taxes still ultimately rests on your shoulders should the payroll service fail to remit them. You also want to make sure that you will not incur penalties or receive multiple notices from the taxing authorities if the service makes repetitive errors.
At VAST, we work with many outsourced payroll services on behalf of our clients. We are happy to help provide recommendations and more information on the pros and cons of outsourcing your payroll or on choosing a service to use.