Many small business owners outsource payroll duties to third-party payers like reporting agents, or payroll service providers. It’s a common practice that comes with a relatively low reason to worry whether the services will be completed or not. But while many payroll and accounting businesses offer and excel at providing payroll service, there are some who do not.
Here are some tips that a business owner can enact to help protect themselves from unscrupulous third-party payers (read more at IRS.gov).
1. Enroll in a tax payment system
More precisely, the Electronic Federal Tax Payment System made available free through the US Treasury Department. What it does is give employers easy access to all payment history through their Employer Identification Number. This will give further access to whether a third-party payer is completing their respective job duties, and allows the small business to make missed deposits, etc.
2. Don’t change your address to the third-party payer’s address
Though according to the IRS you are allowed to make this change if you desire, it is highly unrecommended. It is recommended, however that you continue to keep using your own address so that you continue to receive notices and any other important documentation the IRS may need to send you, as well as enabling you to keep an eye out for improper funding.
3. Don’t delay in contacting the IRS
If you receive any bills or notices be sure to get into touch with the IRS as soon as possible. This is especially true in the situation in which a payment was scheduled to be made by the third-party payer and was not. Contact the IRS business tax hotline at 800-829-4933 or visit a local IRS office right away.
4. Reporting agent’s have special rules
If you are using an RA, please keep in mind that there are some differences, and some special rules apply. For the most part, RA’s are required to use EFTPS and file payroll electronically. According to the IRS, RA’s are also required to outline specific responsibilities through a written statement
including a reminder that the employer, not the reporting agent, is still legally required to timely file returns and pay any tax due.
A statement that is required upon entering into an agreement with an RA, and should be re-done after each quarter.
5. Due dates are important
While you may be paying for a service that helps you run your business more smoothly, you should never neglect knowing specific tax dates yourself.
For more information on how we can help you with all of your small business’s financial needs, contact us any time.