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Payroll Tax CPA answers what is Payroll Accounting? Can I be my own payroll accountant?

Payroll tax CPA and payroll tax accountant

In some cases it’s prudent to keep payroll accounting in-house. It’s certainly cheaper. I can help you decide about that. If the answer is yes, I can help set payroll up and then be available for support as required. (910) 399-2705.

I used a payroll tax CPA when I ran my first business, before I had any accounting experience. He charged an exorbitant amount to cut six checks a month. He made it seem like some mystical process that I should absolutely avoid. Later a non-CPA payroll accountant acquaintance introduced to payroll accounting. Her pet peeve was the cost when I easily do it myself. I immediately brought payroll accounting back in-house. I try to pass that on. Some companies don’t have a skill set to be self-sufficient. Others do, but prefer outsourcing payroll. But in cases where in-house payroll accounting is both prudent and desirable I can help make that happen. So the answer to my question, “Can I be my own payroll accountant?,” is probably yes.

Hi, I’m Gary Bode, a CPA with a virtual office to serve clients nationwide. Distance isn’t an issue.

  • I’ve been a payroll accountant where I hand processed $350,000 a month payroll.
  • I’ve worked with, I believe, every available payroll accounting program.
  • I’ve seen, I believe, every possible payroll accounting mistake.
  • In some cases I provide in-house payroll setup and training.
  • Then I’m available for support as needed. Sometimes this is a logical alternative to payroll outsourcing.

“At least consider keeping payroll accounting in-house.” 
– Gary Bode, payroll tax CPA and accountant

What is Payroll Accounting?

I take a broad view on payroll accounting since other issues are closely intertwined. In my version, payroll accountant functions include:

  • Collecting IRS and State required annual tax forms like the IRS W-4.
  • Applying for accounts with the IRS, State and State Unemployment agencies.
  • Applying for a Work Opportunity Tax Credit for new employees if applicable.
  • Gathering employee data for each pay period like hours worked, vacation time used, healthcare premium deductions etc.
  • Verifying the above payroll accounting data.
  • Calculating gross payroll.
  • Calculating employee payroll tax deductions; federal withholding, Social Security withholding, Medicare withholding, health insurance premiums etc.
  • Cutting the net payroll checks.
  • Distributing the payroll checks.
  • Setting up direct deposit.
  • Calculating the employer payroll taxes.
  • Holding employee taxes in Trust.
  • Cash flow management and associated discipline.
  • Depositing employee payroll taxes with the tax agencies.
  • Depositing employer payroll taxes with tax agencies.
  • Setting up and maintaining an employee pension plan.
  • Dealing with employees on payroll accounting issues.
  • Calculating and paying Workman’s Compensation.
  • Calculating, paying and reporting State unemployment tax.
  • Calculating, paying and reporting federal unemployment tax.
  • Paying health insurance premiums.
  • Handling employee garnishments.
  • Handling COBRA.
  • Preparing the company’s Form 941.
  • Preparing the company’s Form 940.
  • Preparing the company’s W-2(s) and W-3.
  • Gathering data, paying subcontractors and preparing Form 1099-MISC.
  • Entering payroll data in the company’s bookkeeping system.

“The above payroll accounting function list appears complex. But once I setup your payroll accounting, the chores become a set of known processes; only the numbers change. Note many payroll accounting services don’t include some functions in the above list.”
– Gary Bode, payroll tax CPA and accountant.

Pros of Outsourcing Payroll Accounting

Remember there are different levels of payroll accounting service.

  • Saves time, but not by as much as one might think.
  • Might handle multiple State payroll better. Maybe not.
  • Depending on the company’s payroll accountant, an outside service may improve accuracy.
  • May improve record keeping.
  • Sometimes forces appropriate cash flow by immediately withdrawing funds for all payroll liabilities, not just net paychecks. Poor cash flow discipline with payroll taxes means high penalties and can even end up with criminal charges against you.

Cons of Outsourcing Payroll Accounting

  • Cost. One company I worked for used ADP. Honestly I had to do most of the work and ADP charged a fortune.
  • Embezzling. Every payroll tax CPA hears horror stories. But these stories include in-house payroll accountants. And you can help prevent theft by implementing some payroll accounting safety measures.
  • Your company still does most of the payroll accounting functions like gathering payroll data and sending to the outsourced payroll accountant.
  • You might lose the opportunity to understand your company’s payroll process.

I’m a payroll tax CPA who believes in self-sufficiency. Payroll accounting isn’t rocket science. With new clients our virtual office handles their payroll for a while and then sets up in-house payroll accounting when other startup issues resolve. For a free consult please call (910) 399-2705.

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