By Bernie Schwab
It’s not uncommon for harried new business owners to make errant assumptions. There’s so much to do and so little time. Instead of finding out what something actually costs, they just assume they can’t afford it.
That’s especially true of payroll services. When I tell prospective clients about payroll, they say, “That’s it? That’s all it costs?” Once we get past that obstacle, they find there is much more to payroll than they imagined.
Here is What Every New Business Should Know about payroll:
1) Tax compliance is critical and complex. Over the decades, multiple layers of state and federal rules have sprouted up. There are continual changes in state and IRS reporting requirements. Changes may affect things like pre-tax adjustments for retirement plans, insurance benefits, health savings accounts, garnishments and child support. One mistake will cost a lot in penalties. Some businesses fail because they don’t pay their taxes on time. We have seen a small business working with another payroll provider have a $128 tax payment balloon into over $2,000 in penalties and interest over a nine month period. Having the right payroll partner that understands the rules and regulations is critical in paying and filing your payroll taxes correctly and on time.
2) Manage your cash flow. It’s a fairly common practice for most payroll companies to impound/collect your tax monies prior to them being due to the government agencies. Depending on your company’s required deposit frequency, they may hold onto your tax money up to 90 days. Holding your tax money allows them to earn the interest on it before making the payment to the government on the actual due dates. Spruce Valley does not impound/collect your money in advance – you earn the interest on your money. Instead, we notify you when the tax is actually due and we initiate the transfer directly from your bank account to the appropriate government agencies. That gives you control of your cash flow.
3) Don’t overlook quality of service. When you have payroll questions, you want immediate answers. Who picks up the phone? Is it someone at a central call center providing answers off a FAQ sheet? Do they understand your issues? Most business owners don’t know what they don’t know. You shouldn’t have to be your own advocate. The team at Spruce Valley Payroll & Service acts as a personal advocate for our clients – we lead and guide them through every step of the payroll process.
4) Focus on your business. Ultimately, the main benefit of outsourcing payroll is to help startups focus on their core business. There is a cost of opportunity involved when you invest your time doing payroll when you could be working the phone to drive in more revenue for the growth of your business.