I met with a representative from Paychex this morning, and the experience was extremely pleasant. I’ve known for a while that I would need to outsource my payroll needs. You might think that it’s just a matter of writing yourself a check every week, but it’s a bit more complicated than that. In fact, it’s a royal pain in the stones. There are forms, forms, and don’t forget some more forms. There’s quarterly reports you need to file, income tax, state unemployment tax, federal unemployment tax, Medicare, etc. The list goes on. And those are just the taxes the business has to pay on top of your salary. That doesn’t include the taxes that are taken out of my salary afterwards, nor does it include changes to the tax laws in the middle of the year.
As an example, lets use nice round numbers and say I’m paying myself $1,000/pay period. Based on the 11% corporate employemnt tax, the business will pay out $1,109.80 to Paychex, plus the processing fee of around $30, give or take, and depending on the pay period. I’ll need to have around $1,150 in the business account to handle payroll for the week. Then, Paychex deducts all the state taxes, federal taxes, and whatever else gets taken out of my paycheck just like everyone else (who legitimately pays their taxes of course). Then on payday I’d get a check for probably between $600-$700, depending on deductions, income level, pay frequency and what-not.
Paychex will handle all of that for me. From what I understand, I go to their web site every week, tell them how much I need to be paid, the funds are withdrawn from the company account the day before payday, and the following day at 12:01am, the funds show up in my personal checking account, sans taxes. Sounds pretty simple to me, and that’s what I’m paying for. Simplicity, and the fact that it gives me more time to work on my business.
I could certainly do it myself, but to be honest, I really just don’t want to. It’s well worth $30/pay period to have them do it for me and simply tell me whether I’m breaking any laws. Mind you, they made it very clear that they’re not there to advise me on what I should be doing. They do what I tell them to. Their advice was to ask my CPA for advice.