Business Taxes & Processing Payroll

Every business has to pay taxes and every employer has to process payroll. There are options for both and some things that are necessary to know in order to avoid any future complications.

Payroll can be processed automatically or by hand. If a business only has a few employees, the owner may choose to continue processing the payroll by hand. Once a company has more than a few employees on their team, automated payroll processing is more likely a better fit. Automated payroll makes complying with state and federal wage, hour’s rules and regulations, employee information, income tax record keeping, and salary rates streamlined and easy. It keeps track of each employee’s information throughout the year along with any changes that happen such as moving, marriage, having children, or changing their income withholding. The computer software does the math for the employer, will transfer the numbers to the proper forms, and can be accessed anytime online.

Another choice for payroll processing is outsourcing. There are three options here. One is Payroll Service Providers which prepare payroll tax returns using the employer’s identification number. All that’s needed is a signature from the employer and then filing, of course. The second option is called a Reporting Agent. A reporting agent will do the same thing a payroll service provider will do with the addition of signing the returns and filing them for the employer. The third option is called Section 3504 agent also known as professional employer organization.. An agent takes over as the employer for certain employees. The agent will prepare the payroll tax returns, signs them, and files the returns. The employer supplies the Professional Employer Organization and Reporting Agents with funds to cover net payroll, payroll taxes, 401(k), and any other withholdings necessary.

When pondering how your business will process payroll, keep in mind that the company is liable for any inaccurate information regardless if it’s done by hand, by a computer, or outsourced.

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