A new study reveals that outsourcing payroll functions reduces payroll tax penalties. The study, conducted by Empagio Human Resources Outsourcing, was conducted online during the month of September 2006. 209 financial and human resource executives participating in the study. The titles of these people ranged from CEO, CFO, president, vice-president, director, and manager. The results of the study did not reveal the sizes of the companies represented.
Reduced Dollars Spent on Penalties
72% of those participating in the study said that outsourcing their payroll reduced the actual dollar amount of tax penalties being paid to various government agencies. Only 1% said their payroll tax penalties increased by outsourcing. The reminder, 27%, said there was no change in the dollar amount of tax penalties by outsourcing.
Reduced Frequency of Tax Penalties
69% of those participating in the study said that the frequency of paying tax penalties was reduced by outsourcing their payroll. 2% said the frequency of paying tax penalties increased by outsourcing, and the reminder, 29%, said there was no change in the frequency of paying tax penalties by outsourcing.
Why Should Businesses Reduce Payroll Tax Penalties?
There are three important reasons businesses should strive to reduce payroll tax penalties:
- Payroll tax penalties are quite stiff; paying them damages cash flow
- Payroll tax penalties are not deductible on tax returns
- Late payments and filings are frustrating to those who are responsible for them; decreased productivity results
Unlike other business expenses, there is no financial benefit to paying payroll tax penalties. They are really a drain on business resources, both the human side and the financial side.
Why Does Outsourcing Reduce Payroll Tax Penaltyies?
Payroll providers are trained in the complex task of payroll. Because of all the different federal and state taxes and regulations, wage bases, reporting requirements, and payment requirements, payment is a tedious maze of timetables and decisions. Proper training and experience are important to getting the task completed correctly.
If your business runs payroll in-house and has been paying payroll tax penalties, consider outsourcing this important function. Many of the smaller payroll providers offer inexpensive payroll solutions with a wide range of up-to-date features, such as direct deposit and electronic filing at no additional charge.
For more information on the 2006 Empagio Executive Study on Payroll and Tax Filing, visit Empagio, Inc.