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

Many employers outsource some or all their payroll and associated tax tasks to third-party payroll service companies. Third-party payroll company can simplify business operations and assist satisfy filing deadlines and deposit requirements. A few of the services they provide are:

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

• Reporting, collecting and transferring employment taxes with state and federal authorities.
  
  Employers who contract out some or all their payroll responsibilities ought to consider the following:
  
  - The employer is eventually responsible for the deposit and payment of federal tax liabilities. Despite the fact that the company might forward the tax amounts to the third-party to make the tax deposits, the company is the accountable party. If the third-party stops working to make the federal tax payments, then the IRS might evaluate charges and interest on the employer's account. The company is accountable for all taxes, penalties and interest due. The employer may likewise be held personally responsible for particular unpaid federal taxes.
• If there are any issues with an account, then the IRS will send out correspondence to the employer at the address of record. The IRS highly recommends that the company does not alter their address of record to that of the payroll provider as it may substantially restrict the company's ability to be informed of tax matters including their business.
• Electronic Funds Transfer (EFT) should be utilized to deposit all federal tax deposits. Generally, an EFT is used Electronic Federal Tax Payment System (EFTPS). Employers need to guarantee their payroll companies are utilizing EFTPS, so the companies can confirm that payments are being made on their behalf. Employers ought to sign up on the EFTPS system to get their own PIN and utilize this PIN to regularly confirm payments. A red flag must increase the very first time a provider misses a payment or makes a late payment. When an employer registers on EFTPS they will have on-line access to their payment history for 16 months. In addition, EFTPS allows companies to make any extra tax payments that their third-party supplier is not making on their behalf such as approximated tax payments. There have been prosecutions of and companies, who acting under the appearance of a payroll service provider, have taken funds intended for payment of work taxes.
  
  EFTPS is a protected, precise, and simple to use service that offers an instant confirmation for each transaction. This service is used totally free of charge from the U.S. Department of Treasury and allows companies to make and verify federal tax payments electronically 24 hr a day, 7 days a week through the web or by phone. To find out more, companies can enlist online at EFTPS.gov or call EFTPS Customer care at 800-555-4477 for a registration form or to consult with a client service representative.
  
  Remember, companies are ultimately responsible for the payment of earnings tax withheld and of both the employer and staff member portions of social security and Medicare taxes.
  
  Employers who think that a bill or notice received is an outcome of a problem with their payroll company must get in touch with the IRS as soon as possible by calling the number on the bill, composing to the IRS workplace that sent out the costs, calling 800-829-4933 or visiting a regional IRS office. To find out more about IRS notifications, costs and payment choices, refer to Publication 594, The IRS Collection Process PDF.