Penalties for late filing of taxes or incorrect payments are a common cause of concern among many businesses, particularly smaller companies who tend to prefer to tackle their payroll duties singlehandedly. This may work well for some business owners who have enough time to devote to payroll, but without specialist knowledge of the many state and federal rules, laws and regulations surrounding it, it can be easy to slip up and make costly errors. Business owners who choose not to outsource payroll, are still legally responsible for any cases of misrepresentation or failures to inaccurately report employment taxes to state and federal government agencies.
The benefits of outsourcing payroll:
Companies who specialize in payroll and its many different elements, will keep themselves up to date with all changes to employment related tax laws and will ensure that you and your business are always legally compliant. Policies also change regularly, and as a business owner, it’s doubtful that you would have the time to research changes to laws and policies and that’s when they run the risk of incurring costly penalties.
Payroll companies have experts on their teams who will not only take care of payroll, but many other HR related duties, too. Some will handle the administration of employee benefits and all deductions in the payroll system, along with employee compensation and the changing of class codes when their allocated job role changes. Others will help with a whole range of employment issues and offer up HR strategies to help businesses improve employee relations.
How often do tax laws change?
Over a decade long period ending in 2010, there were estimated to have been 4,430 changes to the tax code, which averaged out at more than one every single day! In 2010 alone, there were around 579 changes; hard to believe, but you can see how important it is to keep on top of all changes and make sure that your business remains compliant.
Naturally, such constantly changing tax laws have an impact on tax planning, tax return, preparation and, ultimately, tax cash flows for any business. A payroll expert will make it their job to ensure that they are always fully aware of any changes that may affect businesses, and will update them accordingly.
What are some of the consequences of failing to comply with tax laws?
Failing to meet all state and federal guidelines for tax compliance can easily result in some costly consequences for your business. You may leave yourself vulnerable to a government audit, incur expensive fines or in a worst case scenario, you may be forced to dissolve your business altogether.
Outsourcing payroll is one of the simplest and most cost-effective ways of ensuring that you and your business stay tax compliant. It may be tempting to try and handle payroll yourself, but the risks far outweigh the benefits, and while you may feel as if you can’t afford to pay a third party, you must ask yourself if your company can afford to pay costly fines and penalties that it’s highly likely to incur if you aren’t aware of the ever changing state and federal tax rules and regulations.