Some U.S. small business owners are spending up to three workweeks per year just handling payroll taxes for their companies, according to a new survey by the National Small Business Association (NSBA).
Results from the NSBA’s 2014 Small Business Taxation Survey showed that while 60% of small businesses handle payroll on their own, 11% spend more than 10 hours a month on the administration of payroll taxes. Another 43% spent three to 10 hours a month on the tasks, the survey showed.
Doug Simmons, who handles payroll tax filings and deposits for customers at Patriot Software, LLC, said some small business owners may think they are saving money by handling payroll taxes on their own, but may not realize that there is a cost to their time.
Simmons explained that in addition to calculating payroll tax liabilities and making deposits according to the proper IRS schedule, business owners who go it alone also have to contend with state and local payroll taxes, federal and state unemployment taxes, correspondence with the government, and preparation of W-2s for their employees.
“The customers who sign up for our payroll tax filing service find that we are saving them in more ways than one,” Simmons said. “Taking that burden off their plate is huge.”
In the online survey, the National Small Business Association asked 1,100 small business owners questions about the overall tax burden on small businesses. Business owners ranked payroll as the second-biggest administrative burden on their businesses, behind income taxes. Payroll taxes were ranked as the number-one financial burden for small businesses.
“Small business owners need to really ask whether handling payroll taxes on their own is the best use of their time,” he said.