While some tax obligations come with safety valves, such as the option of filing for an extension on income tax returns, there is no leeway with payroll taxes. If you file your reports or make withholding deposits late, the meter on interest and penalties starts running immediately for failure to file, failure to deposit, and failure to pay.
Payroll is more than just issuing paychecks and filing a year-end W2. You must also file monthly or quarterly reports with the IRS along with various state tax agencies, and money must be transferred from the business to the appropriate taxing agencies timely. When you withhold taxes from your employees’ pay, that money no longer belongs to you. It is part of the employees’ pay and needs to be deposited on their behalf before the deadline. The IRS does not look kindly at employers who treat the money they withhold from their employees’ pay checks as a cash flow cushion.
The argument for outsourcing payroll administration functions is strong, and it’s only getting stronger. Not only can you reduce your exposure to missed filing deadlines and the penalties they trigger, you stay compliant with ever changing labor laws and tax regulations. Outsourcing will free you up to devote to more of your time to business-strategic activities and you’ll benefit from increased employee satisfaction and morale. At Payroll Vault, our mission is supporting your success. Visit us, we’d love to be your payroll partners!