Outsourcing payroll tasks can be a sound business practice, however ... Know your tax duties as a company

Many companies outsource some or all their payroll and related tax duties to third-party payroll service suppliers. Third-party payroll provider can simplify service operations and assist fulfill filing deadlines and deposit requirements. A few of the services they supply are:

- Administering payroll and employment taxes on behalf of the employer where the employer provides the funds at first to the third-party.

• Reporting, gathering and depositing work taxes with state and federal authorities.
  
  Employers who contract out some or all their payroll duties must consider the following:
  
  - The company is ultimately accountable for the deposit and payment of federal tax liabilities. Although the employer may forward the tax totals up to the third-party to make the tax deposits, the employer is the accountable celebration. If the third-party fails to make the federal tax payments, then the IRS may assess penalties and interest on the employer's account. The employer is accountable for all taxes, charges and interest due. The employer may also be held personally accountable for particular unpaid federal taxes.
• If there are any concerns with an account, then the IRS will send out correspondence to the company at the address of record. The IRS strongly suggests that the company does not alter their address of record to that of the payroll service supplier as it might considerably restrict the company's capability to be notified of tax matters including their business.
• Electronic Funds Transfer (EFT) must be used to transfer all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are using EFTPS, so the companies can validate that payments are being made on their behalf. Employers need to sign up on the EFTPS system to get their own PIN and use this PIN to regularly verify payments. A warning should go up the first time a service company misses a payment or makes a late payment. When a company signs up on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS enables companies to make any extra tax payments that their is not making on their behalf such as approximated tax payments. There have actually been prosecutions of individuals and companies, who acting under the look of a payroll service provider, have stolen funds meant for payment of work taxes.
  
  EFTPS is a safe, accurate, and easy to use service that provides an immediate verification for each deal. This service is provided totally free of charge from the U.S. Department of Treasury and enables companies to make and validate federal tax payments digitally 24 hr a day, 7 days a week through the internet or by phone. For more details, employers can enroll online at EFTPS.gov or call EFTPS Client service at 800-555-4477 for an enrollment type or to speak with a customer care agent.
  
  Remember, companies are eventually responsible for the payment of income tax kept and of both the company and staff member portions of social security and Medicare taxes.
  
  Employers who believe that a bill or notice received is a result of a problem with their payroll provider must call the IRS as soon as possible by calling the number on the costs, composing to the IRS office that sent the expense, calling 800-829-4933 or visiting a local IRS office. To find out more about IRS notifications, expenses and payment options, refer to Publication 594, The IRS Collection Process PDF.