Payroll Compliance and Solutions
By Jonathan Porter, CPA
Running payroll for a business can be complex especially when reports are due in January, April, July, and October. Today, Jonathan Porter explains how technology can assist in completing these reports and other solutions to help alleviate some of your business stress.
Jonathan Porter, CPA | Senior Manager
See vlog transcription below:
Hey, I am Jonathan Porter and I am a CAS Senior Manager at McGowen Hurst Clark Smith. In this video, I am going to talk about Payroll Compliance and Solutions.
If you run payroll for your business, you know that the quarter-end and annual compliance forms for payroll can be a cumbersome process. At the end of every quarter, you are responsible for filing reports to summarize your payroll transactions. These reports are due in the months of April, July, October, and January. Most business will complete a 941 form quarterly to summarize the transactions for the federal government. Each state is different, but most will include a quarterly form to summarize the withholdings and have another quarterly form to summarize the state unemployment tax paid by the company. At year-end, you will also be required to file form 940 for federal unemployment tax and form W-2s. Some states require you to send the W-2 information to them separately. As you can tell, running the payroll is only part of the process, and it’s important to businesses to stay compliant with filing their required forms and paying taxes in.
If you are completing payroll by hand, I would highly recommend utilizing a service to help get this task done. With technology, the back-end compliance work can be completed affordably, so I believe businesses would see benefits from making it more electronic.
For payroll process options, we see clients go different directions depending on their complexity and in-house ability to complete the work. Either clients will complete this task by themselves using a payroll solution or by hand. Also, they might handle the daily tasks for payroll and then outsource the quarterly and annual reports to a payroll provider. Lastly, they might outsource the complete process to a third-party and only be required to get employee hours to that provider.
For payroll solutions, there are a lot of options that businesses can use. Most of the time, their accounting software will have some ability to handle the payroll transactions and the compliance forms. In most instances, within the accounting software, you will have the ability to have the software company handle the compliance portion of payroll, which is convenient. We recommend clients who have employees that have a background in payroll or only have a few employees go this direction. This will typically be the most cost-effective way.
Another option is to outsource part or all the payroll. You can outsource the payroll to a firm that has this service or a cloud solution that specializes in payroll. With outsourcing to a firm, you might have flexibility in how everything is handled. Also, the firms are great options if the business has something unusual with the payroll or a lot of complexity with gross pay, deductions, or multiple states. The cloud solutions are becoming more popular and are an affordable way for businesses to be hands-off on payroll with getting the same benefits of complete outsourcing. The drawbacks with cloud solutions are the programs are very rigid, so it is important to complete research to make sure that solution works best for the company.
At MHCS, we offer payroll solutions to our clients based on their needs. We can complete the payroll internally or we will recommend cloud-based solutions that we know work well with accounting systems. If you are thinking of making a change in your payroll process, please do not hesitate to reach out to a team member.
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