For the small-business owner, payroll can be one of the most vexing responsibilities. The core competence of most small businesses has nothing to do with accounting. Because of this, owners who process their own payroll must learn about accounting systems, IRS and state revenue agency regulations and the most efficient way to disburse payments. Few have time to ride up this learning curve.
Certified public accountants (CPA)s offer payroll processing services, but there is more to their abilities than meets the eye.
CPAs have gone beyond the average accountant to earn the CPA certification. This distinction requires intense study for a challenging exam that demonstrates CPAs are competent in advanced accounting practices. These skills allow them to counsel business clients on financial planning, tax planning and payroll processing, in addition to a myriad of other important financial matters.
By hiring a CPA, business owners can focus on their core competencies and rest easy because payroll will be processed accurately and in compliance with all regulations.
What Does Payroll Processing Involve?
Doing payroll is about more than processing paychecks. It starts with deciding how much to pay employees, how often and which should be hourly and which salaried. Doing payroll also requires determining the right employee classification: independent contractor, temporary employee or permanent?
CPAs help business owners make these decisions. They use their financial acumen to project how compensation decisions will impact the business in the long term, taking the guesswork out of deciding what each employee is worth. They also counsel on the advantages and disadvantages of each employee classification.
In addition, CPAs help business owners decide if they can afford to hire and if payroll has grown too expensive. Because of this, CPAs provide their clients with the data they need to make tough business decisions.
New Hires
When a new hire comes onboard, a CPA will gather the necessary withholding information and calculate the payroll-, federal- and state taxes and other deductions. The CPA enters this information into the payroll system and manages any changes in the future.
New hire forms must be signed by all new employees and stored in a specific file. Regulations require this paperwork be maintained and available upon request by the employee. Also, these forms are mandatory in case of an audit by a federal-, local- or state agency. CPAs ensure all documentation is in place, so your company passes any audits with flying colors.
The U.S. Department of Labor, IRS and state revenue agencies have their own recordkeeping requirements, and a CPA keeps your company in compliance.
Pay Periods
When pay periods end, CPAs handle the processing of paychecks, reporting of tax information and the payment of taxes when due.
To process a paycheck, the CPA must calculate gross pay for each employee, deduct federal and state income taxes and Social Security and Medicare contributions. In addition, the CPA handles any voluntary deductions, such as insurance premiums and retirement plan contributions.
One often overlooked benefit of CPAs is that they know how to efficiently process wage garnishments, such as those issued by the IRS, civil courts or child support enforcement agencies.
CPAs also calculate the amount of employer FICA taxes for the period and make payroll tax deposits to the IRS. The deposits to the IRS are equivalent to the amount withheld for federal, state and FICA taxes plus the employer’s share of payroll tax.
Tax Reporting
Regulations require businesses to submit tax reports on a regular basis, which CPAs also take care of. These include quarterly reports to the IRS showing tax liability and the amount paid during the previous quarter. The IRS also requires an annual unemployment tax report demonstrating unemployment tax liability and the amount paid towards it. CPAs also complete state unemployment and workers compensation reports.
CPAs provide much more than accounting services. They also help clients make complex financial decisions by providing the data they need to see into the future. On the payroll side, CPAs counsel business owners on how their payroll decisions will affect the company’s future. In addition, CPAs handle the daunting administration of a payroll system and keep the company in compliance with all regulations. By hiring a CPA, business owners can gain expert financial advice while ending payroll headaches.
Tax Avenger Canton MI can help with your business accounting and payroll needs. Our CPA / accounting firm is dedicated and committed to providing exceptional service to our clients. Our services include business accounting and payroll services, individual and business tax preparation, tax problem resolutions and more! With over 18 years’ experience, our firm prides itself on the extensive international and local experience in accounting and taxation. Call us today to learn more with a Free Consultation!