Sooooo…. how do your payroll taxes get paid?
- I pay directly to the IRS/States.
Excellent! Do you verify the links at least once a year? Do you make sure the payroll taxes are actually credited on the next statement? One of the most common problems is people scheduling the payments on the due date. They may not realize that ACH bank transfers, like EFTPS, can take up to two days to process. Longer, if there is a holiday.
- My payroll company debits my bank account.
Excellent! Again, make sure you double check your payroll tax accounts on a regular basis.
- I send the money to my bookkeeper who holds onto to it for a few days and then they send the money.
Wait, whut? Really? Your bookkeeper may be the most honest person you know, that’s why you hired them in the first place. But this holding onto client’s payroll funds is one the highest fraud threats that your company can face. She/he might be late on their mortgage and might need the teeny tiniest of loans. They will put the money back. Honest. Once that trend is started, it’s like a payday loan cycle. They become addicted to it. Even regional payroll processing companies have been sued by the IRS and clients over this issue. The clients often don’t become aware until the payroll taxes are not made on time. And then, often it’s six months or more out of whack. Especially if you are forwarding the unopened tax letters from the payroll tax authorities to the bookkeeper/accountant.
Don’t lead them down the fraud temptation road. With today’s technology, the money can be directly wired from the company bank account. In fact, it’s the gold standard of payroll preparation. Don’t hang onto the client funds, unless your company initials are ADP.