Payroll tax preparation is required of all American businesses, who must withhold money from the paychecks of all employees to satisfy federal tax obligations and obligations to the Medicare/Medicaid and Social Security systems. As such, choosing the proper payroll tax preparation service involves determining what individual or company is best able to help the company meet these obligations. Factors in choosing the proper payroll tax preparation service include checking the credentials of those providing the service, reviewing the experience level of those who are providing the service, and comparing the costs and offerings of different service providers.
The first essential question when choosing a payroll tax preparation service is whether the individuals providing the service are certified public accountants (CPAs) or tax attorneys. While it is possible and legal in many states for someone to become a tax preparer without these credentials, it is generally advisable to hire someone who does have one of the two professional designations. Both CPAs and tax attorneys are more fully trained and licensing requirements are more stringent than those set forth for those who are just tax preparers.
The next concern when choosing a payroll tax preparation service is whether that service has experience with a business the size of your business. A smaller business will have different needs regarding payroll tax preparation than a business with hundreds or thousands of employees. As a small business, it can't hurt to opt for a tax preparer with more experience with larger businesses, but if your business is substantial in size, you especially do not want someone to do your payroll tax prep unless he has done so for similarly sized organizations.
You will also need to look carefully into the services provided. Will the accountant or preparer guarantee his work and assist you in the case of an audit? If not, this should be a red flag that the person you are dealing with is not confident in his abilities, and you should not be either.
Finally, consider the cost of the services being provided. Is the cost comparable with the level of experience the preparer has and with the extent of the service being provided? Is the cost within the budget that your company can afford to pay? The level of cost should be both reasonable and in accordance with the level of expertise of the tax preparation service.
