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Payroll tax accounting is the monitoring, management, and reconciliation of payroll taxes at the employee and employer levels. It allows easy and accurate administration of taxes without the usual trouble of confusing numbers and inaccurate entries. Capabilities also include reconciliation to a general ledger, tax service preparation, reports, and ensuring compliance with all relevant tax laws, making things straightforward and in accordance with the relevant rules and regulations. Payroll tax accounting can be performed in-house, but more and more organizations have turned to outsourcing since it's cheaper, more convenient, and you get a professional team managing your taxes.
Pros of Payroll Tax Accounting
Payroll tax accounting services offer a variety of benefits. For example, they help companies monitor their quarterly tax filing, manage the weekly filing of tax updates, reconcile payroll reports, (especially to the W-2 and 941 forms), and reconcile payroll taxes to book journal entries and general ledgers. Many businesses usually find it ideal to outsource all payroll tax accounting activities.
Outsourcing also allows businesses to focus on their work, saves resources used to employ a full-time in-house staff, and allows employees to access their payroll information online, anytime and anywhere. Outsourcing also offers greater accuracy and protection against errors that could result in huge fines from the tax collector. Professional accounting keeps a close and regular eye on your tax accounting, providing you with day-to-day updates that make keeping taxes very easy.
Points to Consider before Outsourcing Payroll Tax Accounting
- Accuracy: Choose a company that offers guarantees as regards to accuracy and turning in error-free tax files. Your agreement should include information on quality control measures and how the provider handles mistakes if they do occur.
- Client base: The size of the client base is proof to many that the company provides exemplary services and excellent security. However, some smaller providers offer similar excellent services with the ability to devote more time to each client, though they may charge more for this personalized care.
- Research: Take the time to research the company before signing anything, including reading online reviews and talking to current and former customers. It's also valuable to talk to companies who have performed payroll tax accounting in-house as well as through outsourcing for an in-the-trenches idea of which is the better fit for your organization.
- Provider within driving distance: Some organizations prefer to outsource to a local company for a variety of reasons. One is if you still cut live checks and want to ensure you can easily pick up checks in the event of an emergency.
Sample Prices of Payroll Tax Accounting
In-house accounting carries the added cost of salary, benefits, and even office space and supplies for your employees. If you choose to outsource, costs vary based on numerous factors, including:
- Your industry
- The number of employees
- The particular company that you hire
- The services you choose
Again, prices vary, but the following estimates should help you compare proposals and develop a tentative budget.
- Outsourcing costs between $2 and $10 per check.
- Paychex charges between $60 and $80 per month, per employee.
- Private book and tax charges between $150 and $200 per month for full service for five employees.
- WIA Payroll Services charges between $60 and $80 per month for up to 10 employees. Additional employees cost an extra $2 to $8 per employee per month.
- Intuit online payroll services charges between $300 and $350 per month for 12 employees.
- Paychex charges between $250 and $500 for up to 30 employees.