The task of making sure companies stay within the boundaries of U.S. payroll tax compliance
restrictions is problematic for many owners and senior executives of midsized businesses, according to a recently released study conducted by the ADP Research Institute in May 2012.
Specifically, one-third of the U.S.-based midsized companies that took part in the study incurred unintended expenses as a result of failing to comply with U.S. payroll legislation
. Of the businesses that were fined or otherwise penalized, the average number of fines and penalties each received was 6.4.
In recent years, a trend of outsourcing payroll processing has emerged. Specifically, according to a separate study by the institute, more than half (54 percent) of midsized companies in the U.S. managed their payroll internally in 2005, while the remainder chose to outsource. By 2011, those who strategically outsourced payroll were the ones in the majority, albeit by a slight margin—52 percent. The study also revealed a decline in satisfaction among respondents that managed payroll in-house.Not all methods of in-house payroll processing are unreliable
Often, businesses that are unsatisfied with their in-house payroll processing are using unsophisticated systems, such as those based on spreadsheets or even pen-and-paper records. The inherent unreliability of these methods can lead to incorrect or incomplete data, which can result in companies falling short of U.S. payroll compliance
Additionally, companies that outsource must be prepared to lose a sizeable measure of control and flexibility. They should also be aware that after they have agreed upon terms of service with their external payroll processors, they will be expected to pay extra for anything not contractually covered—something that can quickly get costly. What's more, outsourcing can compromise the confidentiality of employees' personal information, as transmitting sensitive data to another company exposes it to additional security concerns.How Sage BusinessWorks can help
By implementing the Sage BusinessWorks Payroll module, firms can complete their in-house payroll tasks quickly, accurately and without outsourcing. The payroll software
facilitates the compilation of paychecks, reports, W-2s and more by leveraging a comprehensive employee information database in conjunction with built-in tax tables.
To read more about the study, click here