Outsourcing payroll responsibilities can be a sound service practice, but ... Know your tax obligations as a company

Many companies contract out some or all their payroll and associated tax tasks to third-party payroll company. Third-party payroll service providers can simplify organization operations and assist satisfy filing deadlines and deposit requirements. Some of the services they supply are:

- Administering payroll and work taxes on behalf of the company where the employer supplies the funds initially to the third-party.

• Reporting, gathering and transferring work taxes with state and federal authorities.
  
  Employers who outsource some or all their payroll duties ought to consider the following:
  
  - The employer is eventually accountable for the deposit and payment of federal tax liabilities. Even though the employer might forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party stops working to make the federal tax payments, then the IRS might examine penalties and interest on the employer's account. The employer is liable for all taxes, penalties and interest due. The company may likewise be held personally responsible for certain overdue federal taxes.
• If there are any issues with an account, then the IRS will send correspondence to the employer at the address of record. The IRS highly recommends that the company does not change their address of record to that of the payroll service provider as it might significantly limit the company's ability to be informed of tax matters involving their organization.
• Electronic Funds Transfer (EFT) should be used to transfer all federal tax deposits. Generally, an EFT is made utilizing Electronic Federal Tax Payment System (EFTPS). Employers ought to ensure their payroll suppliers are using EFTPS, so the employers can verify that payments are being made on their behalf. Employers need to register on the EFTPS system to get their own PIN and utilize this PIN to regularly verify payments. A warning needs to increase the very first time a provider misses a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables companies to make any additional tax payments that their third-party provider is not making on their behalf such as approximated tax payments. There have been prosecutions of individuals and business, who acting under the appearance of a payroll company, have actually taken funds planned for payment of employment taxes.
  
  EFTPS is a safe, accurate, and easy to use service that offers an immediate verification for each deal. This service is provided free of charge from the U.S. of Treasury and allows employers to make and verify federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. To learn more, companies can enlist online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for a registration form or to speak to a customer service representative.
  
  Remember, employers are ultimately responsible for the payment of earnings tax kept and of both the employer and staff member portions of social security and Medicare taxes.
  
  Employers who think that a bill or notice gotten is a result of an issue with their payroll company ought to contact the IRS as quickly as possible by calling the number on the bill, writing to the IRS workplace that sent the bill, calling 800-829-4933 or visiting a regional IRS office. To find out more about IRS notifications, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.