Do your employees frequently question the accuracy of their pay stubs? Do they frequently find errors and mistakes? If the answer is yes, this might be an indication that your payroll process might be better handled by a professional.
Even though payroll is typically an automated/computerized process, experience teaches us that it is often “garbage in, garbage out” when it comes to payroll and the cost of such mistakes can be disastrous.
Any software package can produce a paycheck but many other factors must be considered for an accurate payroll such as:
- Are you able to utilize direct deposit?
- Does your payroll interface with your QuickBooks or other accounting software GL?
- When an employee needs a copy of a past pay stub can you readily access it?
- Are Local and State taxes accurately captured? (In Pa. this issue is big!)
- How do you–or do you?–account for PTO (paid time off) accruals?
- ACA considerations
Answers to just these few payroll-related questions are often indicative of a company’s payroll effectiveness and quite possibly its accuracy. This ultimately affects the quarterly payroll tax reporting and the employee W-2.
Payroll tax penalties can often be 100% of the tax due. As an example, if the tax due for a particular tax quarter is $1,000 and–due to inefficiencies or mistakes–the filing is delayed a month, after the first “penalty exception” is used, the penalty applied to this scenario could be as high as $1,000 thus doubling the amount due. We have witnessed business ruination over the assessed payroll tax penalties.
Furthermore, since payroll taxes are considered a “trust fund” tax–a tax collected and remitted that was paid by a third party–the failure to properly remit these taxes can make an unsuspecting employee assigned to the task of remittance, personally liable for the full amount of the tax due!