Business owners often find themselves with intimidating and sometimes tedious accounting tasks like payroll tax withholdings. Fortunately it is not too difficult to find payroll withholding information on the Internet or to locate a payroll withholding provider to help your business avoid costly filing and calculation errors.

Your payroll withholding requirements and calculation complexities will depend on the size of your business and the number of employees on your payroll. Consider the following when searching a payroll withholding directory of service providers or putting together a payroll withholding list of requirements.

1. Would purchasing payroll tax withholdings computer software be beneficial for your company?

2. Would a payroll service be best suited to meet your payroll withholding needs?

3. What level of service would your company require from a payroll withholding provider.

Action Steps
The best contacts and resources to help you get it done

Evaluate the benefits of payroll tax withholdings computer software

Depending on your payroll size and the competence of any employees you have on staff that perform accounting functions, it may be worth considering the purchase of payroll tax withholding software for you or your staff to use to file taxes.

I recommend: Caliber Technology provides tax table data and software to assist you with all aspects of payroll, including tax withholdings. Payroll Mate payroll software by RealTaxTools is designed for small- to medium-size businesses. This software calculates net pay, withholding tax and state and local payroll taxes.

Evaluate the benefits of hiring a payroll withholding provider

Payroll services are one-stop shops for taking care of payroll administration and payroll tax compliance so you don't have to. These payroll service providers often offer additional services such as human resource expertise and even field tax agency inquiries on your behalf.

I recommend: Perquest's payroll service handles all tax returns filings, reports new hires to the appropriate governmental agencies and handles all aspects of federal tax paperwork in anticipation of the IRS April 1 deadline. BuyerZone has an online submission form that will provide you with free payroll services rates from multiple, well-known payroll vendors.

Decide what level of payroll withholding service your business would require

Depending on the number of employees on your payroll, you may be able to save money on a payroll service by selecting a plan tailored for companies similar in size to yours. Some providers offer a less expensive service specifically for smaller-sized companies that will calculate payroll tax withholdings, but will not file them on your behalf. Services targeting larger companies include human resource support in addition to comprehensive payroll services.

I recommend: Paychex offers two levels of payroll tax and processing services. One level serves companies with more than 50 employees, the other for those with less than 50 employees. Automatic Data Processing, better known as ADP, offers payroll processing and employee payroll tax filing for companies of all sizes. ADP offers three categories of service depending on company size: less than 50, less than 999 and more than 1,000 employees.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If you don't need a year-round service and don't feel like anyone in your company can handle available computer payroll software programs, consider hiring a bookkeeper. Many bookkeepers have experience with payroll withholdings and filings. Most will work flexibly for your business on a part-time or as-needed basis.