Business owners are expected to wear 1,000 different hats on any given day. Though staying busy and tackling new challenges is part of the excitement of entrepreneurship, it can be overwhelming at times, and you’re not expected to be an expert in every area of your business. The key to finding balance is discovering what tasks can be delegated. One of the best ways to streamline operations and save time is partnering with a third-party provider who can solve multiple problems for you with just one product or service. Some entrepreneurs are surprised to find out how many advantages there are to work with a payroll provider because they feel their operation is too small to realize the benefits. However, business owners who choose to set up payroll early enjoy advantages that save them both time and money.
Here are a few ways investing in payroll early can help you succeed in business.
Payroll Providers Help You Save on Headcount
The most expensive asset in your business is, or will be, the people. Hiring the right staff is crucial to your business’s success but so is operating within your budget. Fortunately, choosing the right payroll system can mean not only paying your employees efficiently, but also automating some of your human resources tasks.
Payroll Providers Help You Maintain Employer Compliance
Working with experienced full-service payroll providers such as Ascend Staffing comes with the benefit of working with small business experts. As a part of your payroll package, they’ll provide services and resources critical to your business — including some you may not have thought of. With offerings such as employment poster compliance, state unemployment insurance and garnishment payment servicing, they address some of the complex yet necessary requirements for your business.
Payroll Providers Manage Recruiting and People
Recruiting, benefits and compliance are all areas payroll services can support with its people management software. Consider the steps and associated costs of onboarding just one employee: sourcing, job posting, applicant tracking and background checks. These tasks do not come cheap and often require outside help from recruiting agencies. In fact, Entrepreneur estimates the cost of hiring a new employee can add up to $4,000. Comparing this cost with the amount you’ll spend on payroll — which you’ll need in some form to pay employees anyway — makes the choice to go with a full-service option that covers these services a no-brainer.
Payroll Providers Oversee Human Resources Rules & Regulations
Hopefully you’ll never experience the cost, time or stress associated with an HR blunder, but no business is completely immune. The best way to prevent and prepare for this situation is to have a clear and concise handbook, performance tracking and on-hand resources. Partnering with a company who offers complete HR support as a part of their payroll services puts you in a better position for the unexpected. Support offerings even include access to a live team of HR professionals to answer questions via phone and email.
Payroll Can Help You Avoid Unnecessary Fines and Fees:
Tax and Payroll Penalties
When the IRS comes to mind for small business owners, they usually think of their annual Form 1120 and the potential risk of an audit. Though taxes can’t be avoided, and the risk of audit is low (about 1.9 percent) — yet costly — for small businesses, it’s extremely common for the IRS to enforce penalties for tax errors. In fact, the IRS assessed $2.1 million in penalties against business income tax filers in 2016.
As soon as you have one employee (even including yourself, the business owner) on your payroll, you have taxes due to the IRS in the form of federal income tax, social security taxes and Medicare. Failing to pay these taxes both on time and in the correct amount becomes expensive quickly. Last year, American business owners were fined over $6 million for employment tax errors. Unless caused by an inability to pay, penalties for both business income and employment taxes are all avoidable.
Business owners who are the sole employee of their company or run a very small operation may think they’re in the clear when it comes to the IRS. Not so. If your business is a corporation — or an LLC following the corporate tax structure — these rules still apply to you, regardless of how many employees are on your staff. Reasonable compensation rules state that if you’re performing services for the business (and can afford to) you should pay yourself a salary. Once you or anyone else is receiving a salary, the quarterly payroll tax rules apply.
401(k) Employee Deferral Penalties
If you plan to offer retirement benefits to your employees, such as a 401(k) plan, there are additional potential payroll-related errors to be aware of. Employee salary deferrals must be deposited into their individual retirement accounts within seven days of payroll. Depositing the funds even a day late is a serious offense in the eyes of the IRS and can trigger a 401(k)-plan audit. Late deposits also mean reconciliation at the end of the plan year and payments on lost earnings.
Though the consequences of payroll-related penalties are serious and costly, working with an expert can ensure they’re avoided. Opting into a full-service payroll provider, such as Ascend Staffing means having these calculations and deposits made on time in the correct amounts — allowing you to focus on running your business rather than minute details. For added peace of mind, some companies, like Ascend Staffing, will pay the resulting penalty if they make an error on your payroll tax calculations and deposits.
When you’re launching a business, it’s easy to think you’re too small to need a payroll provider. However, making the early investment to partner with an industry expert can put you on track to hire and pay your employees with ease as well as avoid unnecessary penalties — crucial advantages to your business’s success.
Ascend Staffing industry’s leading payroll service providers to small & mid-side business offer exclusive discounts to their clients. Contact us to learn more: