3 Reasons To Outsource Employment Tax
An ERP can be an effective tool for your organization, but there may be areas it can't cover — outsourcing may be the solution.
Your organization may have decided to invest in an ERP (enterprise resource planning) solution. An effective ERP system is a critical tool to manage production, inventory and order processing. These systems incorporate database management and include analytics, the results of which are typically displayed in an easy-to-read dashboard.
This is a major undertaking and should not be approached lightly. Although ERP solutions are powerful, they don't do everything. There are some instances where you may want to outsource particular functions that can complement your existing ERP system. One of these is employment tax. Here are three reasons to consider outsourcing this function.
1. Compliance Across a Wide Footprint
Given the number of different federal, state and local requirements that must be met, and given how often those requirements change, filing employment taxes can be a complex, burdensome process — especially for larger enterprises spanning multiple states and municipalities. Just one error can lead to audits and costly punishments. Indeed, the penalties and fines for non-compliance with tax-related requirements can be high and can add up as the number of jurisdictions that are non-compliant increases. Outsourcing to a third party that is well-versed in tax law can increase your compliance and save you money by avoiding harsh repercussions.
2. Give Time Back for Other Tasks
In a growing organization in a tight labor market, human resources are at a premium. By outsourcing, you can free up the time of some of your personnel, which enables them to work on other mission-critical aspects of the business. You can also tap a base of knowledge that you may not have in-house, get answers to your questions and promptly address any issues and concerns that arise.
3. Improved Security
Handling payroll in-house has long been a risky endeavor. Today, there are more threats to your organization's data than ever before. When the proper security measures aren't taken during the employment tax filing process, a number of problems can arise. Identities can be stolen. Information can disappear. Money can be embezzled. Someone could even tamper with your business's records.
These troubles are far too common: According to InCorp, employee theft costs U.S. businesses up to $50 billion each year.
However, if you outsource employment tax filing to a trusted, established third party, where data is held on secure servers, you can gain peace of mind knowing your organization's confidential information is well-protected.
ERP systems are powerful. Outsourcing some aspects of your employment tax duties and planning can enable your organization to more fully leverage and exploit your system's capabilities.
