Payroll Taxes Ranked #2 in Top Burdens for Small Business Owners

The 2013 Small Business Taxation Survey was just released by the National Small Business Association (NSBA) in the days leading up to the 2013 April 15th Tax Filing Deadline and Payroll Taxes Ranked #2 in both the Top Administrative and Top Financial Burdens of small businesses. 


A note from the forward in the survey...

"When it comes to payroll taxes, one-third of small businesses report spending more than six hours per month on the administration of payroll taxes, which, while it may not sound overly burdensome, amounts to more than 72 hours per year, or nearly two full work weeks."


That's an eye opening amount of valuable time, and the study asked if small business owners were outsourcing payroll in order to reduce their time spent on payroll administration:

40% of the respondents said they "Use a Payroll Service Like ADP or Paychex to prepare...payroll" 

and...

"...one in three report spending more than $500 per month on payroll services"

While most of my small business clients tend to spend in the $100 to $300 per month range, it is interesting to note the amount of small business employers choosing to outsource coupled with the amount business owners are willing to pay to reduce their payroll tax administrative burden.

Most of the small business owners I work with tell me (as a reason they are choosing to outsource):

1. They have little knowledge of payroll tax compliance regulations 
2. They have some knowledge but don't have time to learn all of the payroll tax compliance regulations
3. They are knowledgable of payroll tax compliance regulations but it is more cost effective to outsource than to perform payroll administration themselves

Based on personal experience over the last ten years, most owners and accountants are interested to learn of how many small business owners outsource payroll services with just one or two employees. During our conversation, I can often reference a one or two employee company I had just set up in the current or previous week that had made the choice to outsource.

With time savings becoming ever more valuable in the struggle to operate a successful business, it seems to be becoming more justified to outsource a compliance function like payroll services - which, at the current rate of government regulation changes and requirements, may become more and more of a necessity and less of a convenience. 

Payroll Services Can Provide Check Fraud Protection

Small business owners, have you ever been afraid of check fraud against your company due to a company issued payroll check?

Seattle, like most other major cities, has had a history of this problem.

If you have 10 employees that you pay with live checks twice a month. That's twenty pieces of paper out there with your bank account information (and signature) every month, just from payroll.

In their 2012 Report to the Nations, The Association for Certified Fraud Examiners (ACFE) revealed a few key challenges...

"Check tampering was three times as common and payroll skimming schemes were noted almost twice as often in smaller organizations than in their larger counterparts"

"Most occupational fraudsters are first-time offenders with clean employment histories. Approximately 87% of occupational fraudsters had never been charged or convicted of a fraud-related offense, and 84% had never been punished or terminated by an employer for fraud-related conduct"

If you're worried, here's something to look into if you have to pay employees via check...

Most payroll services now offer a check fraud protection service whereby payroll checks are drawn off of the payroll services' bank account. The checks issued then have the payroll services' signature and bank account numbers on them instead of your company's.

The NFIB made some recommendations last year to reduce a businesses chances of experience payroll check fraud. #5, Positive Pay, is an additional service, with an additional cost, on the banking end - but your payroll services company may likely have a Check Fraud Protection Option...which you can also pair with the NFIB's recommendation #7, Direct Deposit.