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Pondering a Payroll Service? Book It! .By Patricio Figueroa, Jr The beginning of the calendar year ushers in a great deal of work for the fiscal staff of any organization, corporation or mom-and-pop store. By the end of January, all income statements have to be completed and in the mail. Businesses are required to submit to the Internal Revenue Service (IRS) the following: the W-2 statement of wages paid; the W-3 employer forms; the 1099 statement of income paid, usually to consultants or non-employees; Form 990 (for not-for-profits); the 1090 forms, used to report various types of earnings and distributions at the end of the calendar year; Form 940, the Federal Unemployment Tax Act (FUTA) return, paid by the employer; Form 941 (the employer’s quarterly federal tax return); Form 945 for federal income tax withholding; and Form 1096 (annual summary and transmittal of U.S. information returns). And, of course, there are similar forms for the state, charity registration, and so on. That is why I had an accountant, a bookkeeper and a treasurer who was also a top-notch accountant. And yes, I outsourced my payroll to a service. Many small organizations do not have payroll services, preferring to go with a bookkeeper and bookkeeping software. Bookkeepers are good and accountants are even better, but a payroll service…well, that’s just priceless. I remember the debate among and between my colleagues concerning the age-old question: Which is better: a bookkeeper or a payroll service? When it came to the beginning of the year and the end of every fiscal quarter, a payroll service was worth its weight in gold, in my opinion. Those who favored a bookkeeper argued that he or she could answer the telephone, staff the receptionist’s desk during lunchtime and help around the office during downtime. Bookkeepers have downtime? If you have one with downtime, you’re not using the bookkeeper well, or optimally. Nowadays, the cost for a package of services from a payroll company (ADP, Paychex, etc.) is just a fraction of a full-time bookkeeper’s salary. I will admit that a payroll service does not totally eliminate all in-house fiscal tasks, but it reduces them so significantly that all you need is a part-time bookkeeper or secretary and a good accounting firm. My opinion on this matter is this: Once you have more than 25 employees, you need a payroll service. Let’s look at what some bookkeepers have to do at an average job. To governmental agencies, they have to submit such paperwork as unemployment forms, garnishment forms, child-support forms, workers’ compensation forms and payroll forms. They have to reconcile Social Security numbers with names, keep track of staff accruals (sick time, vacation time, etc.), bill the funding sources, answer requests for income for credit applications, verify citizenship for new employees (unless the director does this), reconcile bank accounts, issue stop payments and answer calls from health insurance companies or a myriad of other sources. Simply put, a bookkeeper’s work is never done. But those who attempt to do payroll themselves using the latest software still spend huge amounts of time — time they could spend running their businesses or improving services. Small-business entrepreneurs should not get stressed out over those things they hate to do (accounting, especially payroll accounting); they should do what they do best: make money or fund-raise. You must make money or increase resources in your organization, and you must focus and spend your time wisely. Outsourcing payroll and other fiscal tasks are not just economical but legally prudent. Payroll services provide not only payroll checks, but a variety of management reports. Generally, a payroll service can track almost all of the bookkeeping tasks listed above. And, best of all, if it makes an error in filing any official form, it assumes the legal blame. It’s like driving with no-fault insurance. If you don’t have a payroll service for your organization, you’re driving a car with no tires. *******************************Patricio Figueroa, Jr. is a first-generation CIL director who has worked as a consultant with countless not-for-profit organizations, CILs and corporations. He has a master’s degree in public administration from New York University. He lives in New York state. |
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