Payroll processing can often become burdensome for a business owner because local, state, and federal tax regulations change regularly – and often with little notice. Failure to keep up and comply with the most recent payroll tax laws could result in fines and penalties for your business.
Businesses that process payroll internally should follow the latest legislation to ensure compliance and confirm the amount of taxes they are paying is accurate. The IRS Publication 15 (Circular E) is designed as a handbook for employers to understand current tax laws. We encourage you to bookmark the equivalent guide for your state or local jurisdiction.
There are other rules to follow based on what applies to your business. Generally, smaller businesses can't justify the expense of a full-time employee dedicated to payroll issues. If this is the case, you'll have to spend extra time educating yourself on payroll requirements to assure compliance. If you're paying a mileage expense for employees based on the IRS guidelines, verify the correct amount with the IRS. Make sure to spend time verifying that the forms you're filing for all payroll and tax purposes are the most recent version. If you are using an outdated version, it may get rejected and delay processing time. While national laws certainly get more attention, set up a news email alert for state-related requirements. Many states are taking a bigger role in issues surrounding wage deductions and payroll.
One way to save the time and headache of determining accuracy is to consider hiring a payroll service. Many of these operations are "full service," meaning that they manage employee payroll, cut checks, and submit the tax payments and returns. For a busy employer without the background in accounting, payroll, and income tax, this can reduce stress and valuable time spent on non-revenue related activities.