An important part of payroll processing is making sure that withholdings, both tax and voluntary, get distributed correctly and timely. While some payroll services compute the withholding, they sometimes drop the ball or leave remittance to the employer to figure out.
Rothrock Payroll Services knows that stewardship of your withholdings is serious business and whenever appropriate remits withholdings electronically to the government, agency or insurance provider.
Late and untimely remittance of withholdings can have grave consequences on your business that range from an automatic 10% penalty for being one day late on federal payroll taxes to the loss of employees. Here is a case study on how grave the consequences can be;
A professional services firm with a dozen employees had been preparing its own payroll and filing its own payroll tax deposits and forms; as wells as withholding and depositing its retirement plan deposits. Unfortunately, a period came when cash was tight and the owner chose to delay depositing retirement plan monies withheld from the employees’ paychecks. After a time, the professionals employed by the company, notified the Department of Labor and some left the company. As staff levels fell, there was a serious reduction in sales revenue.
In addition to the loss of employees and revenue, the improper calculation and deposit of retirement funds and payroll taxes resulted in penalties and personal liability to the owner of the company.
This fact pattern is a fairly common occurrence. Messing around with payroll withholdings is a major cause for small business failure. Having an independent, objective payroll processor like Rothrock Payroll Services calculate and remit taxes and benefits ensures that the calculations will be done properly and ensures that the payments will be made timely.
Every business that processes payroll will eventually get audited. The audit may come from the IRS, the state tax division, workers compensation, state unemployment or a variety of other agencies.
Regardless of their source, an inquiry letter or audit from the government is always alarming. It is common for a business to be tentative and not know how to resolve the matter. In this moment of need, most payroll processors tell you to call someone else.
We are not most payroll processors; Rothrock has tax experts on-site to dispatch and resolve all audits and inquiries. Rothrock has state of the art systems and trained payroll professionals that process your payroll correctly. We have systems in place to ensure accuracy and we timely meet all federal, state and local reporting obligations. Consequently, our clients don’t live in fear of the government.
When existing businesses change to Rothrock, it is somewhat common for there to be letters and government inquiries that were not resolved by the previous payroll provider. Here is an example of a client that recently joined Rothrock.
Just over a year ago Rothrock began processing payroll for a client that had previously used a national payroll service to process their payroll. Within a few weeks, Rothrock discovered several different agencies were trying to impose tens of thousands of dollars in taxes, penalties and interest.
Rothrock obtained authorization to represent the client, contacted the government directly and discovered that the source of the issues arose because the prior payroll service failed to timely provide reports. Rothrock prepared the appropriate reports, sent them to the various government agencies and the tax, penalty and interest due the government was reduced to zero.
Rothrock prefers our clients to be informed. Whenever mail comes from the government, we encourage our clients to open and read what is inside. Then quickly get the letter to us so we can timely respond and resolve whatever the issue is.
Most businesses view payroll processing as a commodity; find the lowest cost provider. While Rothrock Payroll Services generally is the lowest cost provider, we know that processing payrolls correctly can save our clients money. So, unlike other payroll services, Rothrock accomplishes all payroll related filings for our clients – including worker's compensation reporting.
While the national payroll processors generally don’t provide workers compensation reporting, accurately classifying your employees and securing any/all premium reductions are an important part of payroll processing. We often find that new clients have previously misclassified employees and therefore over paid their worker's compensation premiums.
Here is an actual example of a client that recently joined Rothrock;
Prior to becoming a client, a business completed their own workers compensation reports. Once they became a client, Rothrock prepared the subsequent workers compensation report. In completing the first report on Rothrock’s watch, it became obvious that substantially all the client’s employees had been incorrectly classified under a more expensive manual code. The problem had persisted for several years and result was substantially over paying the workers compensation premium.
Rothrock Payroll immediately assisted when we discovered the client’s mistake. Our Payroll administrators made contact with the Bureau of Worker’s Compensation, attained new and correct manual codes for the client’s employees and the client’s premium dropped dramatically.
The bottom line is that Rothrock Payroll Services saved the client money; while the national payroll providers won’t even get involved in workers compensation reporting.
Sometimes CPAs do not like referring payroll work to professional payroll processors. Moreover, CPA firms often attempt to process client’s payroll themselves. But processing a client’s payroll without the proper systems, training and commitment is wrought with pitfalls that can result in not only losing a client’s payroll business, but also losing the client.
The following testimonial is from one CPA firm that regularly refers his clients to Rothrock;
“I met one of the principals of Rothrock Payroll at a networking event several years ago, and of course she told me she was a CPA and was promoting the payroll services of her firm. As a fellow CPA, the first thing you would think that went through my mind was that she was competition and would not be able to help me or my business. But as we got to know each other we found we complement each other well in many ways, and can share many different engagements as we can each do work the other does not want to be involved in. Rothrock is a very professional and exceptionally talented group and I have now recommended them to several of my clients. They have handled all the referrals with fantastic results. I highly recommend Rothrock for their payroll services as their customer service is what sets them apart. Many of us have dealt with ADP and Paychex and find their customer service to lack the personal touch but I believe you will find that Rothrock Payroll Services shines in this area and they are not happy until their client is happy too. It is worth your time to talk to them about how they can help meet the payroll needs of your company.”
Gary Cerasi, President - Creative Business Strategies Inc
Rothrock Payroll Services doesn’t sell insurance but we work closely with health insurance brokers to ensure our clients obtain the best coverage available. With the advent of government provided health care, a business needs to analyze all options to ensure maximum value for the costs they are bearing.
By analyzing costs and alternatives, Rothrock can help guide employers that are mandated to provide their employees with group health coverage. For businesses that are not required to provide a group health plan to their employees, Rothrock can assist in analyzing the costs and benefits of continuing to provide a small group plan versus accessing individual coverage through the government or private exchanges.
Here is what one broker had to say about our services;
“I was introduced to Rothrock Payroll Services through my CPA. If you are looking for someone (an organization) to provide great payroll services and to receive exceptional value, insight and an understanding of issues facing your business, then Rothrock is that team. I recommend them unequivocally.”
David Montgomery, Vice President, Health Insurance Enterprises
Changing payroll service providers can be a little scary. While there is the promise of lower fees and better service, there is also the inertia of knowing that while you may not be happy with your current payroll service, at least your employees are getting paid.
Rothrock makes the transition as smooth as possible and performs test payroll runs to ensure nothing goes wrong.
If you have paid employees in the past, we work from copies of (a) reports from your most recent pay run and (b) the most recent payroll tax returns. Rothrock will extract the employee and employer information needed. Then we replicate your last payroll on our state-of-the-art system; basically providing a “double check” to identify any errors or omissions.
This new client, in-take process allows us ensure accuracy, gain familiarity you’re your company, and helps to identify errors that may have occurred in prior payrolls.
The following is a common fact pattern that happens when we begin processing a new client’s payroll;
A closely held business had been obtaining payroll services from a CPA firm. The client felt that they were not being properly serviced and asked Rothrock Payroll Services to bid their work. Rothrock engaged the client for a slightly smaller fee than the client had been paying.
Rothrock entered data from the most recent pay run and discovered that the new client was not only behind in making tax deposits for prior periods, but also was using the wrong method of remittance (paper checks, as opposed to electronic transmissions). Since the CPA firm that previously processed the payroll also had been receiving all payroll related correspondence directly from the government, the client did not realize that there were substantial tax deposit penalties outstanding.
First, Rothrock structured the new client’s current tax deposits so that they were being made timely via the proper payment method; stopping the vicious cycle of recurring new penalties. Then, Rothrock negotiated with the IRS to establish an installment plan for the client to payoff back taxes due, bringing the client into compliance.
Payroll is normally one of the largest expenses a business incurs. Rely on Rothrock to make sure you don’t incur penalties and interest on top of the employee expense.
A closely held business with several employees had been obtaining payroll services from a CPA firm. The client felt that they were not being properly serviced and asked Rothrock Payroll Services to bid their work. Rothrock engaged the client for a slightly smaller fee than the client had been paying.
During the setup process, Rothrock enters every new client’s year to date payroll information into our systems and review prior year forms. We mirror the processing of at least one prior pay run. This facilitates a review of the pay runs and tax deposits prepared by our predecessor and enables Rothrock to increase its familiarity with the new client. This critical step often results in the discovery of errors and omissions.
Here we learned that the new client was not only behind in making tax deposits for prior periods, but also was using the wrong payment method (paper checks, as opposed to electronic transmissions), resulting in several thousand dollars in penalties per year. First, Rothrock structured the new client’s current tax deposits, so that they were being made timely via the proper payment method, stopping the vicious cycle of recurring new penalties. Then, Rothrock negotiated with the IRS to establish an installment plan for the client to payoff back taxes due, bringing the client into compliance.
The client response was simple – “This is a huge weight off my mind. We should have switched to Rothrock sooner!”
The act of paying an employee for service is more than a transaction between and employer and employee. You don’t always think about it but over a dozen various government agencies are involved every time an employee gets paid. We remit withholdings to some of them while others only get involved if they believe there is a violation of law.
A good example of this is a Department of Labor Wage and Hour audit. While it is possible for a Wage & Hour audits to be performed via random selection, that’s usually not the case. Most of these audits are a result of a disgruntled current or former employee. Here is the recent experience of a Rothrock Payroll client;
A local hotel had hourly and salaried employees. Under the federal Fair Labor Standards Act, employees must be classified as exempt or non-exempt based on the duties they perform. Once classified, they must be compensated with minimum wage and overtime as applicable.
Rothrock recognized that the client did not have a good understanding of the pertinent laws; so they recommended that the hotel maintain job descriptions, time records and properly classify its employees; paying minimum wage and overtime as required.
As can happen to any company, there was a dispute with an employee and the employee contacted the Department of Labor; claiming they were due back-pay for overtime and etc. The Department of Labor issued an audit notice with a $60,000 assessment.
Thankfully the hotel operator followed the recommendations provided by Rothrock. With the documentation that was put in place, Rothrock was able to successfully defend the hotel.
When the audit was finished and the assessment was eliminated, the client offered the following to the auditor; “I am sure glad I’m with Rothrock; the procedures and processes they recommended that I have in place saved my business.”
You never know when a Wage & Hour audit will occur. Having a payroll provider that does more than just compute net checks will help you be ready.
A client in the construction contracting industry was lured away from Rothrock Payroll Services to a Professional Employer Organization by promises of human resources assistance and reducing employee risk; that is, help in screening potential hires, providing benefits, and processing workers compensation claims. He also increasingly assumed, since his company would be leasing his employees from the PEO, this would limit his 941 payroll tax liability (failure to pay the correct amount timely). Pursuant to Treas. Reg. 31.3504-2(b), if a business's PEO does not meet the service agreement test to be "designated to perform the acts of an employer" and/or has not obtained the IRS certification of "CPEO," the business will likely be held liable for unpaid employment taxes, even if the business made the necessary payments to the PEO. From the time this client left Rothrock until they went out of business the company revenue increased 28% while the payroll processing fee increased 1300%. This increase in payroll processing expense, among other increased cost, in a low margin environment, caused the owner to recently sell the business. Had this client stayed with Rothrock he would have had $13K per year more money with which to run his business.
|Payroll Processing Fees||1,120||4,771||9,409||9,899||11,874||13,840||13,840|