Many businesses have payroll services to help with processing paychecks for employees. Even a very small business can benefit from the services that a payroll service can offer them. But there are some other services that payroll services generally offer at the end of the year going into the New Year. Here I will list some of those services that payroll service companies can offer you and it’s up to you to decide if you need them or not
Collecting Information for 1099’s
If you have paid non-employees (independent contractors and freelancers, for example) that you are going to need to give a 1099-MISC form at year-end, you can ask your payroll service to make those payments throughout the year. Your service can also be responsible for all of the 1099 preparation and filing. The entire task is taken off of your desk as an employer!
You must also ensure that each non-employee signed a W-9 form which gives information about taxpayer ID and mailing address.
You also will need to determine whether a 1099 is required for each and every person or business on your list. This is a two-step process. In general, a 1099 is required for all individuals and non-corporate businesses for whom you paid $600 or more during the year. Visit https://couponzdeal.com/payroll-outsourcing-can-save-any-business-thousands/ to read about how Payroll outsourcing can save any business thousands.
Collecting Information for W-2 Forms
W-2 forms are some of the most sought-after mail some of your employers will get from you. While this is generally a time of happiness and glee for your employees and they look forward to tax time this can be a stressful time for you as an employer. W-2 forms are basically like an end-of-year exam where the data you submit to the Social Security Administration must exactly match the 941 forms you submitted earlier in the year. If you have sloppy or incomplete records this could be impossible and lead you to some murky legal waters. However, if you have a payroll service there is no need to compile this data yourself as all of it would be handled by your payroll service.
Backup Withholding Paperwork
In some cases, you may be requested by the IRS to withhold federal income taxes from non-employees. This withholding tax can be managed by your payroll service. The service can deduct the necessary taxes required by the IRS. You can also read about the Annual Survey of Public Employment & Payroll (ASPEP) by clicking here.
What Your Payroll Service Won’t Do
While payroll services offer a ton of super useful services there are some things that even they will not do for you. For example, a payroll service will not get involved with new hire forms for employees and forms for hiring independent contractors
Hopefully, this article helps you decide if you would want to use a payroll service for your end-of-year duties as a company and an employer. While there are tons of things that a payroll service will do for you ultimately there are some things that they will not. However, those things can change on a business-to-business basis. So one payroll service may do some things that another may not. Ultimately it’s up to you to research what you need for your needs and see if that is offered. Good luck!