33% of startups get fined for the same reason
The main problem is that many of them do their payroll manually. 46% don't have an accountant, according to a survey from GoDaddy, and that means they don't always comply with all the various local, state, and federal requirements.
Unfortunately, it's costing them. In fact, the IRS issued a staggering total of $4.5 billion in penalties to US businesses in 2013 - all because of payroll errors.
It's easy to see how mistakes are made. For starters, there are more than 15,000 tax codes in the US, many of which change frequently. Tax regulations, such as overtime, vary from state to state. Companies need to factor in variable salaries, commissions, and performance-based bonuses. And taxes need to be filed with different authorities, all of which have their own deadlines.
So how do you protect your business from payroll fines? Most importantly, don't try to handle payroll on your own. Instead, hire an accountant or outsource payroll to a specialist like Justworks, a New York-based startup that manages payroll, benefits, and compliance for a range of companies across the tech, legal, and financial sectors. (It also offers extremely competitive medical insurance rates in New York City.)
Through Justworks, you can hire employees across multiple states without needing to register for state or local withholding tax. If you are fined for a compliance issue, Justworks will cover the fine.
In addition to avoiding penalties, another huge advantage of using a payroll specialist like Justworks - and its streamlined, easy-to-use platform - is saving time, which is crucial if you're trying to grow your business. Qubit, a customer of Justworks, actually reduced its time spent on payroll by 75%.
Generally speaking, successful business owners recognize their weaknesses and know when to ask for help. They tend to focus on the big picture and leave the nitty gritty, like taxes and payroll, to those with the time and expertise to take care of them.
This post is sponsored by Justworks.
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