Did you know that the IRS audits approximately 25% of small businesses for their payroll tax compliance? If the thought of being audited by the IRS makes you nervous, you're not alone.
33% of small- to mid-sized business owners say that they are uncomfortable completing payroll and navigating taxes on their own. Thankfully, HRO (human resources outsourcing) services can help you with this.
Here are some benefits of payroll outsourcing services:
Save Time
Before thinking about payroll taxes, business owners must first focus on payroll processing, or the process of paying employees each payroll period. Doing this in-house can become tedious and time-consuming, pulling you and your staff away from other key functions. In fact, the average small business spends at least 5 hours per week on processing alone.
By having a team of payroll experts process your payroll, you and your team can save time each week, and later when handling deductions and filing taxes.
Managing Deductions
Understanding all of the deductions that come with payroll taxes can be extremely overwhelming. The payroll experts within an HRO will help you tackle both:
1. Statutory payroll tax deductions, or the deductions business owners must withhold from an employee’s paycheck. These deductions include:
Social security tax
State income tax
Medicare tax
Federal income tax
And more
2. Voluntary payroll deductions, or the deductions that come with certain benefit offerings. These deductions include:
Health insurance premiums
Retirement plan contributions
And more
Again, these deductions can be overwhelming, especially if you have many employees. Seeking the expert help of an HRO can simplify the process.
Report and Deposit in a Timely Manner
Payroll tax reporting forms can be confusing, but you are responsible for ensuring that they are all filed correctly. Such forms include:
Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return
Form 941, Employer's Quarterly Federal Tax Return
There are also informational tax forms that businesses need to provide their employees for their personal tax returns, including:
W-2, Wage and Tax Statement
W-3, Transmittal of Wage and Tax Statements
If you partner with an HRO for their payroll tax services, they can help complete these forms and make the necessary payments.
Through their digital portals and employee self-service tools, HROs can also simplify the process of distributing employee tax documents. Rather than come to you, your employees can see their W-2s and review their pay stubs and accrued time off online.
Looking for Help?
While completing payroll taxes can be a time-consuming and complicated process, it doesn't have to be. Utilizing an HRO service can help you avoid extra stress, costs, and time.
SynchronyHR, an HRO based in St. Louis, assists business owners of all sizes with their payroll. Contact the team today to learn more.