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Considering Moving Payroll In-House? What Business Owners Should Know

In-House or Outsource

According to the National Small Business Association (NSBA), the 2013 Small Business Taxation Survey found that 40 percent of small business owners outsource their payroll while 60 percent said they handle it in-house. Of those handling the process internally, nearly one in four report spending more than six hours per month on the task. [1] There are various factors to consider when determining how to handle your business’ payroll and taxes as it can be overwhelming and challenging for any employee. While some business owners believe it’s too costly to outsource this service, others say that it’s worth paying professionals to handle.

Here are some of the employment tax and compliance considerations to think through when deciding whether to process payroll in-house:

  • Filing errors – Whoever handles payroll internally should have a deep understanding of employment tax laws and regulations. Lack of expertise could result in errors, missed deadlines and penalties. According to IRS figures, 40 percent of small businesses pay an average penalty of $845 per year for late or incorrect filings.[2]
  • Differing tax laws – If your business has multiple branches in different states, or has employees who work across multiple states, your internal team needs to comply with each state’s evolving tax legislation.
  • Time and resource restrictions – Time spent on monthly payroll and employment tax processing interferes with the time employees could spend focusing on strategic business initiatives. In addition, many employees handling payroll and employment tax filing have other responsibilities to take care of, including filing quarterly reports and managing health and retirement plan contributions.[3]
  • Angry employees – Your employees expect to be paid properly and on time. Errors in payroll and employment tax processing, and delayed payment of wages, could prompt your employees to seek employment elsewhere.

It’s important to evaluate these and other factors and think about your needs to determine how payroll processing and employment tax filing should be handled for your business. Click here to learn more about how ADP could help your business.
 
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[1] http://new-talent-times.softwareadvice.com/where-should-payroll-live-0613/

[2] http://smallbiztrends.com/2014/11/outsourcing-payroll-tips.html

[3] http://www.businessnewsdaily.com/7477-choosing-payroll-service.html

 


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