Payroll Management Tips for the New Year

If you're doing client payroll, now is the perfect time to get in shape for 2006. Whether you're processing payroll for the first time or spending hours doing payroll manually, here are some helpful and important tips from www.paycycle.com to make managing client payroll easy this year:

1. Stay Informed About Payroll Withholding Tax Changes
   Payroll withholdings such as federal and state income taxes, Social Security and Medicare can change at any time. Without reliable tax rate updates, you risk calculating taxes incorrectly and getting penalized by the IRS. In fact, a majority of small business employers regularly experience payroll tax penalties. According to IRS statistics, there were over 6.3 million payroll tax penalties assessed in 2004 - with a $388 average penalty.
   
   
2. Remember That Unemployment Taxes Can Change, Too
   With over 400 tax updates in any given year, it's important not to overlook changes to employer taxes. Accurate paychecks address only half of the employer's responsibility. You must also accurately calculate employer-only taxes, such as federal and state unemployment.
   
   
3. Pay Taxes On Time
   Once taxes have been accurately calculated, the next step is to remit them to the appropriate federal and state agencies. Employers must follow assigned deposit schedules, and it is important to stay on top of deadlines to avoid paying costly penalties.
   
   
4. Don't Forget to File Forms
   In addition to paying federal and state taxes, small business employers must also file federal and state tax forms. Some states even require multiple filings quarterly and annually, and forms often change. You can file federal tax forms (941, 940, 944, W-2) electronically (www.irs.gov/efile). Many states also offer e-filing options. Alternatively, you can choose an in-house or outsourced payroll service that files federal and state forms - either electronically or with pre-filled "signature-ready" forms.
   
   
5. Recognize Contractor Responsibilities
   Even if your clients hire contractors that aren't subject to payroll tax regulations, they are still responsible for giving them Form 1099-MISC at the end of the year and for reporting their payments to the IRS.
   
   
6. Leverage the Internet to Make Payroll as Easy as a Click
   On-demand solutions are becoming increasingly popular with accounting professionals as they look to the Internet for tools to help simplify managing their practice. Payroll is no exception. By choosing a reliable solution, you can save time, hassle and a lot of trees. By taking on client payroll, you help your clients do what they love and do best - focus on growing their business.

For more information on how to make payroll easy in 2006, sign up for a free 1 hour PayCycle sponsored session at www.payrollwebinar.com