Tuesday, October 21, 2008
Payroll Accounting – Hazard of doing it yourself
There are more number of small entrepreneurs than the larger ones who continue staying small because of misconceptions and their inability to understand certain business fundamentals. One such is payroll accounting; while entrepreneurs remain skeptical on the confidentiality of data leaking out, they subject themselves to a gargantuan task – often accompanied by irreversible errors – that eats the better portion of their time, barring a business’ further growth.
• DIY - Payroll accounting hazard
To any person running a business and employing a fairly large number of people, payroll accounting turns out to be true headache. Even if we overlook the intricacies of the rules, rates and regulations, putting everything in the correct format is enough to boggle even the smartest business brains; an inevitable result for such mistakes even in a small business payroll can cost a fortune.
Let’s take a look at the common errors you may confront while doing the payroll accounting yourself.
Payroll tax deposits: This relates to withholding taxes from an employees' gross pay. An employer matches some of these while paying some, which an employee doesn't. These taxes require to be paid at very specific intervals and within strict deadlines to either or both federal and state agencies. A wrong calculation or missing the deadlines may invite some real stiff measures.
Payroll tax returns: Every quarter, certain reports conciliate the earning of employees with the payroll tax deposits. It’s also important filing annual reports that reflect the authenticity of the quarterly reports. The role of the W-2 form cannot be overlooked as well for the employees to file personal individual tax returns. All these require a sharp eye and mechanical accuracy to keep fines at bay.
• Why outsource payroll accounting
Firstly, because outsourcing payroll accounting is a smart option that can save a lot of hard work in exchange of a negligible amount. To compare, tally an outsourcing firm’s charges against the amounts that may show up as fines. Besides, the time you shall be spending to keep those records shall bear more fruits if invested on the business development strategies. And it’s easier to call in the hours and checking the bank account for an amount that shall cover the payroll.
Now, all these points hold true for both the starter and the established; while the starters may avoid unexpected expenditures (fines or the salary of a full time accountant) and make that money flow to support some profit-yielding strategy, the established ones may save more money and concentrate on newer measures to take their business to newer horizons. But mostly, it’s an age of specialists and payroll accounting requires specialized services.
• Benefits of outsourcing for small business
So outsource payroll management to benefit in multiple ways. Firstly, you save a lot of time; small business payroll handling, though embraces lesser number (10-30) of employees, is still a tough task when the details stay associated. Instead, you may outsource payroll accounting and focus on stuff that can make your company grow. Marketing and business development are colossal tasks as well; there is no need to shoulder more burden than is necessary. Besides, outsource payroll to save a great deal of money. If you do not want to handle the accounts yourself, the second best option is to employ a group of accounting professionals full time. It means you have to pay them a fixed amount every month along with insurances, benefits, sick leaves, vacations and other related expenses. Usually, this is much higher than outsourcing the job to independent professionals. The price shall include everything from calculating taxes and deductions, filling out forms, printing them out and delivering the cheques. But most of all, the payroll experts are specially trained and offer you a specialized service free from errors. And when thinking of the bigger picture, you cannot possibly do without specialization!