Payroll processing can be a daunting task, especially for small businesses. Many business owners believe that a little bit of accounting training and some quality experience will be enough to get them through their payroll processing, but there are a lot of other factors involved in the process which may go unnoticed — until they lead to a disaster.
Small mistakes in payroll processing, especially regarding taxes, can cause big problems and the financial repercussions can be pretty steep — especially for a small business that has to watch finances as it is, but even for bigger corporations, this can be a problem. Forbes.com has recently published an article detailing a payroll tax mistake made by the U.S. government that will ultimately result in $5 billion being lost in the next 10 years. That’s right — the U.S. government made a tiny little mistake and the price of that mistake is $5 billion.
According to Forbes.com, this mistake was made by the U.S. Congress when it “applied the wrong formula” to calculating taxes for Social Security and Medicare programs; this formula resulted in self-employed business owners being taxed less than employees, even when they earn the same amount of income. Now, this mistake may not seem like much to the average citizen earning a moderate salary, but this tiny mistake will lead to another $5 billion added to the country’s already astounding deficit. And to make matters worse, Congress reportedly knew about the error and hasn’t made any effort to fix it.
Unfortunately, if a business owner makes a small math mistake like the one made by Congress, he or she can’t simply choose to ignore it. Especially if a business in the U.S. starts employing Canadian citizens, and then has two different governments to answer to.
And this is where a professional payroll processing service comes in handy. These services can handle every payroll-related task for a business, ranging from payroll tax calculations to HR problems. By outsourcing these tasks to a professional accountant, a business owner is ensuring that the tasks will be completed on time and without mistakes — all while being able to concentrate on the company’s real business and maintain a professional and respectable reputation.