Oh what a relief it is to have finally outsourced your California payroll! But, are you aware that even with employer outsourcing you must own the final responsibility for payment of federal taxes? It’s good business practice to implement some checks and balances in order to avoid IRS problems.
According to the IRS some companies/individuals have diverted monies that were owner allocated to pay employment taxes. Any employer outsourcing payroll operations should know his tax liabilities.
Although the IRS supports employer outsourcing as a smart business decision, if correct money for tax payments isn’t received timely – they will come after you, the business owner. They obviously won’t accept excuses, such as your having given the payroll agency sufficient funds to make tax payments.
If for whatever reason – bankruptcy, computers crashed, etc. – your payroll provider does not make federal tax payments, any penalties or interest will be your responsibility.
Tax tip: The IRS urges that the business owner remain as address of record. Changing the IRS correspondence address to the agency you’re using for employer outsourcing means there is a potential to miss vital correspondence concerning your business.
During the search for a California payroll provider, find out if they use the Electronic Federal Tax Payment System (EFTPS). You’ll be assigned a PIN number to monitor transactions. In the event the payroll agency fails to make a payment or sends it in past the deadline, a red flag will pop up to alert you. Signing up with EFTPS also allows you to personally submit estimated payments for your taxes.
Employer outsourcing can make arduous duties concerning California payroll more efficient and remove burdens relative to calculation, deadlines and payment of taxes from your shoulders. However, you must remain vigilant about IRS obligations or pay the price!