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Help small business payroll clients prepare for tax season

In an ideal world, businesses would make tax preparation a yearlong commitment. But often, it becomes a last-minute scramble to find records and CPAs must spend extra time helping owners gather and verify all the necessary information.

A reputable payroll service provider can help your clients with much of the lead-up to tax preparation, so the process runs more efficiently for everyone involved and you have information more easily assessable to prepare their taxes. Here are three ways your clients’ payroll providers can help you this tax season and throughout the year:

1. Storage of complete payroll records and documents: How many times has a client walked into your office ready to start their tax preparation without all the necessary documents? Businesses should have been filing quarterly wage detail reports and other paperwork throughout the year, which will have much of the information needed for their annual payroll taxes, but it’s easy for business owners to lose track of these documents in the shuffle of every day. Through their payroll provider, businesses can easily access all the information they need as they prepare to file their taxes.

Employment tax penalties

2. Keeping up with new and changing regulations: Regulations can change from year to year and may differ if a business operates out of multiple locations. For instance, at a federal level, the anticipated substantial changes to the Form W-4 have been postponed, so the 2019 W-4 will remain largely consistent with the 2018 W-4, absent adjustments for inflation. But changes are happening at a state level in response to federal tax reform. A number of states have already made changes to their withholding allowance forms, and more changes are anticipated as state legislatures go back in session in early 2019. A reputable payroll provider will have a team of compliance experts on staff to keep track of these and other regulatory changes and will quickly incorporate relevant updates into their payroll system, so business owners can be confident in the accuracy of their reporting and compliance with payroll tax laws.

3. Correctly filing taxes with each taxing authority: Once you’ve completed the preparation step, payroll service providers can also help your clients gather necessary tax filing information and report that information to the appropriate taxing authorities in the correct format, whether it be electronic or paper filing. Some states require taxes to be paid at the time of filing, payroll providers can also conduct that transaction for their clients.

According to an analysis of data from the IRS and SCORE, approximately 33 percent of employers make payroll errors, and the IRS reports that 40 percent of small businesses incur an average of $845 each year in penalties for late or incorrect filings or payments. The combined expertise of a CPA and a payroll provider can help businesses avoid costly missteps. Payroll taxes are a complex aspect of running a business, but the right advisors can help ease some of that burden and provide peace of mind when working through the process.