Having an effective payroll management company for your small business is no longer, “just an option”. It is a critical necessity for smooth business operation in today’s dynamic economy where employers need to consider tax requirements, benefit contributions, shift differentials, and many other factors when paying employees.
However, shopping for a payroll company can be quite confusing at times. Different payroll service providers offer different features, which can make it hard to decide which company is right for you. To find the perfect payroll service provider, make sure they meet the five criteria discussed below.
A licensed payroll company that offers in-person services, integrated tax filing and deposits, data security, and direct representation with the IRS can effectively handle the full range of your payroll processing needs.
Here’s what each of those terms means and why they are so important.
1. A Current License
According to the state legislature, any entity or person in Maine who processes business payrolls for a fee must hold a valid license. The license requirements vary based on the nature and extent of control by the payroll processor. In other words, the overall routine performed by a payroll company determines the type of license it must hold.
If the payroll processor manages their clients’ payroll tax funds in addition to regular paychecks, the license should be accompanied by a $500,000 bond. The bond is not only subject to annual renewal, but the payroll processor’s operation must also be audited by the state’s Bureau of Consumer Credit Protection every 18 months. The Bureau also requires Maine payroll processors to carry crime insurance usually in the form of a fidelity bond. Coverage amounts are equal to the highest weekly client payroll from the previous calendar year.
2. In-Person Consultation
There are numerous payroll processors that exclusively work online. Hiring an online payroll company might be a good fit for many businesses out there. However, the drawback of choosing an online-only service is that you might not have a dedicated payroll professional when you need one.
Do you want to be able to contact your payroll processor any time you want? If so, it’s better to find a local payroll company that has an office in your own neighborhood. For instance, Local Economy is based in Portland, Maine, and offers payroll services for small and big businesses all across the Pine Tree State.
Hiring a local payroll company always beats the alternative because you can rest assured that help is readily available at hand. A local payroll processor is also able to provide more targeted solutions. Their services are in line with tax rules and regulations and other financial obligations that might be specific to your area.
3. Tax Filing
Choosing a full-service payroll processing company typically comes with the benefit of letting them handle all the messy paperwork and meet deadlines. However, are you aware that as the business owner, it is ultimately YOU who’s responsible for filing and paying payroll taxes on time?
Late tax filing and payments generally result in penalties that are usually not forgiven. You might be surprised to know that the IRS often issues up to $4.5 billion in penalties annually to businesses that miss payroll tax payment deadlines.
Therefore, choose a payroll company that not only files taxes on your behalf but also helps you track payments. All businesses can monitor the federal taxes being paid on their behalf by using the IRS’s Electronic Federal Tax Payment System (EFTPS). They can also view the relevant State unemployment taxes via Maine’s online unemployment system, called ReEmployME. Having access to this info anytime gives you peace of mind that your taxes are being paid timely.
For any queries related to payroll withholding taxes in Maine, a simple phone call to the Department of Revenue is also a feasible option.
4. Direct Representation with the IRS
Before you commit to a payroll company, make sure they have qualified and knowledgeable staff who can represent you before the IRS. two common designations through which the IRS allows direct representation are an Enrolled Agent (EA) and a Certified Public Accountant (CPA). Therefore, look for a payroll service provider that has these members on the team.
An EA or a CPA can directly work with the IRS and state on your behalf if you happen to encounter any tax issues related to payroll processing.
5. Data Security and Technology
When choosing a payroll processor, inquire about options such as employee portals, onboarding tools, time and access software, and administrative access. These are important resources that must be integrated with your payroll system.
Additionally, you should look into the digital security tools that the company uses. Protecting sensitive data is of paramount importance to every business’s long-term success. Therefore, make sure that the payroll provider utilizes multi-level security solutions to prevent data breaches and crashes.
Local Payroll Services in Maine
Managing payroll is usually one of the most complex and time-consuming tasks for every small business owner. If not done correctly, it can be very costly as well. Local Economy’s premium payroll processing services can save you all unnecessary stress.
Got any questions? We are here to answer all your queries and ensure you find a payroll company that meets all your needs and is pleasant to work with. Call us now at 207.899.0476.