Once a business has hired its first employee, payroll responsibilities will continue every pay period. The complexities of payroll processing require a significant time commitment on a daily and weekly basis — time you can’t make up elsewhere. Whether it’s calculating payroll amounts, generating in-house reports, preparing and remitting local, state and federal payroll taxes and returns, or simply printing, signing, and distributing pay checks, the demands on your time can be costly.
Think of the time required for each of the following:
Each pay period, every employee must have their hours totaled, time and attendance verified for accuracy, and multiplied by their designated pay rate/salary. Then the appropriate amount of taxes must be calculated and deducted from gross pay to determine a net payable amount.
If the employee also receives any benefits or has other deductions, additional calculations must be made. Multiply each of these calculations by the number of employees in your business and it’s easy to see why calculations alone can take a significant chunk of time out of your week.
Once the pay amounts for each employee are calculated, the physical checks must be printed, signed and distributed. Some employees are likely to have direct deposit, so those amounts must be verified and processed electronically, but pay slips still must be made available to the employees. In addition, these records must be securely maintained for tax and reporting purposes.
At the end of each payroll period, the amount of pay earned by all employees, any benefits or miscellaneous deductions withheld, and all payroll tax amounts must be carefully recorded for future accounting purposes.
Payroll figures are also necessary for tax purposes, both for business year-end income tax filing and for quarterly and annual payroll tax reporting. Keeping this information organized and easily accessible for future reporting or delivery to an accounting professional can take additional time each period.
Even after the payroll figures are organized and recorded, there are still additional payroll tax responsibilities each quarter and at the end of each fiscal year. Business owners or designated administrators must carefully calculate and complete a quarterly payroll tax form to prove that the proper amount of payroll tax has been withheld.
At the end of the year, businesses must submit a year-end payroll tax statement that verifies each of the quarterly figures and calculates any remaining taxes due. Like individuals, businesses must also complete a yearly income tax return, and payroll figures are included as a deduction on these forms.
When evaluated on a per-payroll-period or a monthly basis, a time/cost analysis may well indicate the benefits of working with a payroll outsourcing service like Vurke.
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