How to Stay on Top of Changing Payroll Laws
Regardless of how many employees you have, your company has numerous payroll tax responsibilities. They include withholding federal and state income taxes, FICA (Social Security and Medicare), FUTA (federal unemployment tax), along with workers’ compensation and state disability insurance every pay period. Depending on your filing frequency, you’re required to make tax liability payments, and to file quarterly returns, and prepare Forms W-2, 1099, and 940. Calculations depend on how much an employee earns, and calculations can start compounding in complexity when you factor in fringe benefits, bonuses, and garnishments.
However, this is just the beginning. Payroll tax regulations are always changing, and employers generally don’t have the knowledge to understand, interpret, and take action on payroll tax compliance laws.
As an additional challenge, the recent tax overhaul has made the regulatory environment for businesses even more complex: with updated tax withholding tables, adjusted W-4 requirements still to come, and more, payroll laws have perhaps never been more complicated.
You could spend time looking up the many requirements that apply to your business, in hopes that you can detect and then implement applicable regulations. However, this can be a very risky move: this would mean forgoing revenue-producing activities in lieu of compliance – and even then, it’s not guaranteed you’ll interpret regulations correctly.
Payroll mistakes are also more common than you may think: approximately 33 percent of all employers make payroll errors, and the IRS reports that 40 percent of small businesses incur an average of $845 each year in penalties for late or incorrect filings or payments.
Payroll tax regulations are always changing, and employers generally don’t have the knowledge to understand, interpret, and take action on these laws.
Even in light of these statistics, you still may not think that working with a payroll provider would be beneficial to your business. You may choose to work with a trusted advisor, but this can be difficult to find. CPAs, for example, are not always versed in the nuances of laws impacting every aspect of payroll, benefits, and human resources.
That’s why CPAs often recommend that employers outsource payroll to a trusted payroll provider. Instead of keeping up with payroll tax rates, accurately calculating liabilities, and making timely payments on your own, a quality payroll provider can help you with your payroll tax administration. This includes calculating, paying, and filing your payroll taxes with the appropriate agencies on your behalf – which can save you time and reduce your risk of penalties for late or inaccurate payments.
Having this type of assistance can alleviate your often-time-consuming and burdensome payroll tax responsibilities, and give you peace of mind that your business is doing its due diligence in staying on top of ever-changing payroll laws.