Every small and mid-sized business owner has a passion. It’s not taxes.
Yet, tax remittance and administration are paramount to the success of any business. These activities are also ripe for mistakes, even by trusted employees. A dedicated HR expert will take care of your business tax obligations, so you and your team can give your core business needs their full attention.
Through a Professional Employer Organization (PEO), you can get this precious time back. Tax responsibilities can be taken on by a PEO, reducing your burden and stress. The following are just a few of the many tax benefits you can receive when you partner with a PEO.
Whether your company runs payroll weekly, every other week, twice monthly, or once per month, it presents a challenging experience for the employee processing payroll. Although payroll is an area where everyone wants to avoid mistakes, even innocent mistakes can happen.
Calculating overtime, ensuring the proper deductions are made, and making sure the right amount of tax is withheld for federal, state, and local taxes can weigh on the employee processing your company’s payroll. This burden can be carried by a PEO who takes care of all of these administrative tasks on your behalf.
Garnishment Liability and Paperwork Processing
Garnishments are common occurrences. Whether for student loan payments or child support, employees may need to have automatic deductions taken from their paychecks. Ensuring these deductions are accurate and are sent to the right location requires absolute accuracy. If an employee makes a mistake, not only does the company look bad, it can result in costly fines.
Every employee wants to get paid quickly and they want to see that money in their bank account on payday. You won’t need to waste precious time printing and signing checks with direct deposit. PEOs are set up to provide direct deposit and electronic paystubs to employees on day one.
Some employees do not have regular bank accounts. A consequence of this is that small businesses struggle to accommodate these team members. With a PEO, they will have the ability to send pay cards to employees who need them instead of direct deposit.
Not all government agencies have moved to electronic payments. Some still require paper checks mailed to them for your payroll taxes. But the mail does not always come through and checks may get lost. Issuing a stop payment on a check can be time consuming. Re-issuing another check adds to that time. But when you partner with a PEO, they handle all of this for you, taking that burden and giving you your time back.
941 Quarterly Filings
Companies are required to file quarterly tax returns. This is done through Internal Revenue Service (IRS) Form 941. Form 941 shows several items, including:
- Individual employee tax withholding
- Medicare and social security withholding
- Your company’s tax payments and credits
Like most forms for the IRS, this is confusing. Let payroll experts at your chosen PEO handle this complex IRS filing for you. By working with a PEO, you can ensure your Form 941 is filed accurately and timely. Making mistakes can be costly as the IRS is quick to levy fines.
W-2 Preparation and Distribution
End of year reporting is always a nightmare for even small accounting departments. W-2 forms must be provided to employees soon after the turn of the year, meaning that you have little time to get last year’s books in order.
Creating a W-2 also requires skill to ensure the proper amount of taxes, Medicare, and social security have been withheld from the employee’s pay. Disparities in pay can cause a company to have to make up any gaps, especially if the employee is under or overpaid. A PEO helps you keep on top of your employees’ W-2s by making sure they are correct and received on time.
Quarterly Withholding Tax Filings and Deposits
Each business in the country, with few exceptions, must file and pay quarterly taxes. Your company will have to make tax payments for the year based on estimates of what it will owe for the year. Although these payments are estimates, they are still required. If you fail to make an estimated tax payment or do not make it on time, your business is subject to fines and penalties. Partnering with a PEO, you ensure your business has properly and timely filed your quarterly taxes.
The IRS is notorious for handing out costly fines and penalties to companies who do not follow the rules and regulations. From filing Form 941 to providing your employees with an accurate W-2, there are countless ways in which you can trip up.
Working with a PEO, you gain access to a team of experts who can ensure your company stays compliant with IRS rules and regulations. Staying compliant reduces your stress and worry while also giving your employees a stress-free place to work.
HR audits are not required, but you should still conduct them regularly. HR audits can help identify your company’s HR strengths and weaknesses.
But these are extremely time-consuming activities. Your PEO can conduct an HR audit on your behalf as part of their service offering. They will objectively review your:
- Policies and procedures
- Employment agreements
- Independent contractor agreements
- Training programs
- Compliance and management training
When your PEO reviews each of these items, they are looking for holes that could lead to an employee lawsuit or fines and penalties. By conducting regular HR audits, your PEO works to keep your company safe.
Working with the Right PEO Matters
The right PEO has your back. From accurate payroll and tax remittance to IRS compliance and HR audits, your PEO is looking out for your company and your employees. Shifting these time-consuming administrative burdens to a PEO frees you and your team up to focus on your core business needs.
Put these HR responsibilities in the hands of experts who can keep your workplace safe and secure by partnering with a PEO today.