Even the most meticulous and experienced professionals find that payroll can be a headache. Slap on a stiff penalty for a tax filing omission, and now we're talking a full-blown financially-induced migraine.

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For many businesses, payroll services offer an attractive and valuable alternative to in-house processing. Chosen correctly, they provide a less expensive, simpler means of paying your employees, filing your taxes, and performing a host of other duties these companies' sales reps can't wait to tell you about.
However, choosing poorly is like starting a new job you weren't right for in the first place -- it's a hassle to leave, but if you stay, you'll be perpetually frustrated.
Companies often initially process payroll themselves for any number of the following reasons:
  • they consider in-house processing to be more cost-effective than outsourcing
  • they are protective of wage information
  • they want to maintain control over payroll data to handle last-minute changes 

In truth, smaller firms with a stable, salaried staff and minimal changes in tax obligations may well be better off processing internally; it can certainly be more convenient and efficient if your needs are straightforward. But many ultimately discover it's not all that cheap -- especially when you factor in the time spent managing the process.
Plus, without the proper knowledge of payroll procedure and access to a sound payroll program, it's easy to make mistakes. Employees as well as federal, state, and local tax collection agencies need to be paid in full, on time, and in the proper manner. Usually, late payments are cause for monetary penalties.
Finally, using a payroll service can ease your mind. The Internal Revenue Service has reported that one out of every three employers has been charged for a payroll mistake, with total penalties reaching into the billions of dollars. And given the ever-changing nature of tax regulations, it's easy to make an error that can grossly affect your bottom line.
BuyerZone.com can help you select the right payroll service--as well as coach you on switching to a new one. In addition to offering up the nitty gritty on payroll services, we will simplify the industry and empower you with solid working knowledge to apply to your search for a provider.
When to outsource 
While the majority of U.S. businesses process paychecks internally, this is not always cost-effective. At minimum, internal payroll processing requires the purchase of a computer or manual accounting program and extensive training to use it. In addition, businesses need to keep up to date on changes in personnel, deadlines, and tax requirements on an ongoing basis.
Using a payroll service generally makes sense if your payroll changes with each pay period. If your company has employees working varying amounts of hours each week or has a significant turnover rate, a payroll service can be a time-saving and cost-effective alternative to internal processing. Using a payroll service can also be helpful if you have to pay payroll taxes for multiple states.
On the other hand, if your payroll expenses are quite stable, you may find handling payroll internally to be just fine for your needs.
Services provided 
A payroll company's basic services include calculating payroll and tax obligations for each employee, printing and delivering checks, and providing management reports. Paychecks can be issued on a weekly, bi-weekly, monthly, semi-monthly or yearly payroll basis.
In addition, payroll firms can offer services such as automatic check signatures, envelope stuffing, and direct deposit of checks. Payroll firms also issue W-2 forms for an additional fee of about $1 per form.
Many services now offer tie-ins with 401(k) and Section 125 mutual fund plans, allowing employees to designate automatic deductions from their paychecks. And for larger companies with more complex processing needs, some payroll providers have even begun to offer integrated HR software systems that track employee benefits-related information in addition to regular payroll data.
Choosing a provider 
Besides offering the services you require, a payroll service should offer a high level of customer service. Unlike some other business services, you will need to communicate regularly with your payroll provider.
If your sales representative will not be handling your account, make sure to speak with the customer service reps to ensure you will be satisfied. Also, consider requesting references from current clients to gain a better sense of the provider's level of customer service.
You should look for a payroll provider that is within reasonable driving distance, allowing you to pick up checks in case of an emergency. Also check that the company is bonded to ensure your company will not suffer from any potential financial mishandling.
Filing payroll taxes 
Many payroll services offer the option of filing state and federal payroll taxes for your business.
Typically, this service is offered at little or no cost. This is because the payroll provider will impound the tax due at the time paychecks are issued, earning interest on the funds until the money needs to be handed over to the government.
Most services assume responsibility for penalties resulting from incorrect filing; however, your company may be liable for any interest charges.
Keep in mind that many companies will not calculate local or city payroll taxes. Make sure to inquire about this if it is a significant issue for you.
Filing electronically 
With the Electronic Federal Tax Payment System (EFTPS) your company banks by phone with the government, transferring funds electronically rather than relying on checks to keep your "account up to date. If your company paid more than $200,000 in taxes in any year since 1998, then you are required to pay taxes electronically through EFTPS within the following two years. If for example, your company paid over $200,000 in taxes in 1999, then by January 2001, you must pay taxes electronically.
Many payroll services do offer electronic tax payments as part of their package, but in truth, electronic filing is not as difficult as it first appears, and businesses can easily enroll and learn how to do it on their own.
For more information, call EFTPS Customer Service Unit at 1(800) 945-8400 or 1(800) 555-4477.
Relaying information 
Each pay period, payroll data has to be "called in" to the service provider. This can be done via telephone, fax or computer.
The telephone is the traditional way of communicating information. The biggest problem is typically finding a mutually agreeable time for both people to be on the phone.
A fax machine eliminates scheduling conflicts and miscommunicated facts, but can bring up security risks concerning who receives the faxes and who will oversee the fax being sent.
Communicating payroll by modem is often the most efficient method, especially if you have a larger payroll.
Since 1998, several national payroll providers have offered payroll data transmission over the Internet. This simplifies payroll for many businesses, allowing them to download payroll information from any computer that is Internet accessible.
Pricing 
The market for payroll is competitive and reflects local market conditions. The basic service costs between $0.80 and $2.00 per check, plus a base account fee. The amount of the base fee depends on the pay period, with the less frequent payroll periods costing more. Over a year, however, less frequent payroll periods will cost less to maintain.
Added services such as tax filing and direct deposit can cost between $4 and $9 per payroll period. With direct deposit, there is often a nominal transaction charge per check in addition to the base fee.
Furthermore, there can be fees for adding or dropping employees, adjusting employee information, or setting up your account. Fees can differ dramatically across services, so it is important to check them out before signing up for a service.
Since pricing for services is relatively negotiable, try to avoid multiple unnecessary charges by knowing which service features you are most interested in before choosing a payroll company. In general, watch out for providers that offer low base processing rates with expensive add-on features.
Questions to ask
Features
. What does your basic service include?
. How quickly can you re-run a payroll if there is a mistake?
. How long does the average client stay with you?
Tax filing
. If I use your tax filing service, do you cover the penalties and/or interest charges?
. Do you provide filing assistance for local taxes?
. What is the cost to file taxes for multiple states?
Charges
. What is the cost for your service for one year, including year-end W-2 forms?
. How long are these rates in effect? What rate increase should I expect after that?
. If there are payroll data mistakes, how long will it take to reconcile the errors and what will it cost?
Questions for references
. How responsive is the provider to your questions?
. Have you had any problems with accuracy?
. Have you used another payroll service? If so, why did you switch?
Buying tips 
Look for a stable provider 
If a firm's only business is payroll, make sure to check the number of clients it supports. To ensure stability, a payroll service should ideally maintain at least several hundred clients.
Double-check the math when switching 
Transitioning to a new payroll firm rarely occurs without glitches. Be especially thorough in reviewing the first paychecks issued through the service as well as the money paid to cover tax obligations.
Watch prices over time 
Do not be swayed by services that waive charges upon sign-up. Often rates go up or charges start accruing after six months to a year of service.

This News is Reprinted from site http://www.entrepreneur.com/article/47340
The integrity of the local foreign exchange market has been called into question after the corporate regulator launched an investigation into suspect trading in the Australian dollar.
Last month and again on Tuesday, traders appear to have correctly guessed surprise decisions on interest rate movements by the Reserve Bank in the minute immediately prior to the official release.
On both occasions the Australian dollar moved sharply just seconds before the Reserve Bank announcement.
But the trading on Tuesday was particularly noticeable and most seasoned traders smelled a rat.
Just 45 seconds before the Reserve Bank released its decision to keep rates on hold — which caught markets off-guard — an unidentified trader put through a buy order for Australian dollars that booted the currency more than 25 basis points higher.
That pre-empted a surge in the local currency as traders, having already priced in an interest rate cut, scrambled to unwind their positions.
Last month the opposite trade occurred in the seconds leading up to a surprise rate cut.

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On global foreign exchange markets, seconds can mean millions of dollars and even tiny fluctuations can deliver windfall gains.
Treasurer Joe Hockey spoke about the trades to Reserve Bank Governor Glenn Stevens this morning, who assured Mr Hockey the statement was "published exactly at 2.30pm and according to procedures".
"He advised me that he'd spoken to ASIC about the matter," Mr Hockey said.
"I'm satisfied that that investigation will be properly undertaken.
"Obviously I was, like he was, concerned about reports that there had been extraordinary trades before the release of the Reserve Bank decision yesterday."
Getting to the bottom of the suspect trades, however, will be no easy task.
Unlike stock markets, currencies are not traded through a central exchange but through highly sophisticated trading platforms around the globe.
Even then, it is possible no skulduggery was involved.
Some traders warn that the sharp movements may have been amplified by the fact that trading volumes in the lead-up to the decisions was extremely thin. 

This News is Reprinted from site http://www.abc.net.au/news/2015-03-04/australian-dollar-asic-investigation-interest-rates/6280886?section=business
Australia minted 43,500 new millionaires in 2014 because of strong equity and investment property markets, representing the biggest growth of high net worth investors in the past five years as the rich comb for new areas to park their funds, Investment Trends research shows.
The country is home to 443,500 "high net worth" (HNW) investors; those with investable assets of more than $1 million.

This group controls $1.6 trillion in assets, nearly equivalent to the entire retirement savings industry. There are also 580,000 "emerging" high net worth Australians with $500,000 to $1 million in investable assets. 

"If asset values continue to increase, then we can definitely also expect to see the growth in the number of high net worth investors in Australia continue," said Recep Peker, senior analyst at Investment Trends, adding that strong returns from the equities market and property last year helped propel the growth of HNW investors in the market. 

Despite their booming wealth, the research found that only 40 per cent of high net worth individuals sought professional advice last year, down from 44 per cent in 2013, and more than 250,000 of these investors had unmet financial advice needs.

Irene Guiamatsia, an analyst at Investment Trends, said high net worth investors would be prepared to spend an additional $560 million annually on advice, on top of the $1.9 billion they were already paying, providing "a tangible opportunity for the financial advice industry". 

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The research found that ANZ Private Bank took the lead in client satisfaction for private banking last year, edging ahead of NAB Private.
ANZ has been concentrating on more personalised services and access to relevant technical specialists. 

Companies such as Perpetual are also ramping up their efforts to focus on HNW clients.
Perpetual chief executive Geoff Lloyd said the company had about 50 advisers who focused onHNW investors with an average balance of $2.5 million.
Perpetual had the capacity to grow its client base by a further 15 per cent to 20 per cent as demand for advice ramped up, Mr Lloyd said. 

The data also comes as advisers grapple with a series of scandals that have rocked the sector in the past year. These include Commonwealth Financial Planning and Macquarie Private Wealth planners who were embroiled in cases of dodgy advice that cost investors millions of dollars, and, more recently, National Australia Bank sacked 37 financial planners for bad advice.

Despite the negativity, demand for advice remained alive and well across the HNW sector and planners were ramping up their focus on these investors, Investment Trends argued.
"Since 2011, there has been a 66 per cent increase in the proportion of financial planners who are HNW focused," Mr Peker said. 

The largest barrier preventing rich investors from taking up investment advice was the preference for control.

"Advisers need to spin their proposition in a manner which also gives their clients the confidence that they'll be able to maintain some degree of control," he said. 



Confidence levels among the biggest companies in Australia have hit their lowest point since the end of 2012, harming plans for investment and medium-term growth.
That’s the diagnosis from National Australia Bank’s quarterly ASX300 business survey, which found confidence among Australia’s biggest corporations fell 13 points to negative 3 in the fourth quarter of 2014, reaching its lowest point in two years.
Big business’s overall confidence is now below its long-run average and is weaker than confidence levels for smaller companies and in the broader economy.
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“Business conditions continue to show a patchwork economy,” NAB chief economist, Alan Oster, said.
The outlook on the economic environment worsened too, with business conditions for the top 300 companies falling 3 points, but remaining overall positive, at 8 points for the final quarter of last year.
While the fall in conditions was attributed to a drop in profitability and a weaker trading environment, the business conditions results were still above their long term average, Mr Oster said.
Capital expenditure rose marginally in the fourth quarter, driven by non-mining investment, but there was a “worrying deterioration” in medium-term capital expenditure plans, with planned investment expected to be lower over the next 12 months.
“Big business in Australia is losing confidence, in turn affecting medium-term growth,” Mr Oster said.
Business confidence fell heavily in the mining industry, which has now replaced construction as the least confident sector in the top 300 companies.
Forward orders among the larger firms deteriorated for the second consecutive quarter, which may also indicate subdued domestic demand over the next few months.
The silver lining of the report was the weakening Australian dollar, which may be providing momentum for higher export sales and orders.
ASX300 firms have also increased their stock levels.
This news story is reprinted from www.businessspectator.com.au
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Australia’s GST red tape is among the most complicated in the world, stifling small business and hampering the economy, a new report says.
Software provider MYOB says administering the GST is an extreme burden on small businesses, costing almost $14 billion across the economy and roughly $7,000 per business.
The current system requires business owners to sift through every single transaction and justify any items that did not attract the GST, using one of eight categories to explain why.
With 44 per cent of goods and services not attracting the tax, that’s a lot of extra paperwork, MYOB chief executive Tim Reed says.
The complicated system is stressful for business owners who usually don’t understand why the information is collected, are paranoid about getting fined for using the wrong category, and are not aware the process has no impact on the amount of tax they pay, he said.
The government should either remove exemptions to the GST so all transactions attract the tax, or alternatively, remove the requirement for each transaction to be allocated to one of the various `No GST’ categories, Mr Reed said.
The latter option has no impact on the amount of tax collected, and is how the system works in New Zealand, where small business owners are spending half the amount of time and money on GST compliance, he said.
Sydney hairdresser Penny Martin said GST red tape became so stressful, costly and time consuming that she scaled back her business, closing her salon, letting go of staff and regularly turning down clients so she could earn less than $75,000 and avoid the GST responsibilities.
“I have purposely scaled down my business for that very reason, because it’s all just too much,” Ms Martin told AAP.
“I do not want to cop the GST, I’d rather earn less, go away and do a couple of days teaching a week and say no to customers and not bother, it’s just not worth it.”
An MYOB survey of 1,000 small businesses found 60 per cent would change their vote at the next federal election if the government significantly simplified the GST reporting process.
Governments have been aware of how onerous the system is but are reluctant to touch the “taboo” topic of GST, Mr Reed says.
“Any change to the GST is a very politically sensitive area and therefore, many governments have shied away from even raising the possibility of touching the GST,” he said.
Small Business Minister Bruce Billson said the government was already taking steps to clear the red tape, committing to reduce compliance costs by a billion dollars per year.
The matter was also being considered through the tax review white paper, he said.
“We recognise that excessive red tape and compliance costs gum up the economy and strangulate entrepreneurship and that’s why our conviction is to reduce that where it’s possible,” he told AAP.
This news story is reprinted from www.businessspectator.com.au
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The Henry Tax Review identified 125 taxes within Australia levied by all levels of government. Of those 125 taxes, just 10 taxes raised 90 per cent of all tax revenue. The company tax is the second largest source of revenue to the Commonwealth. This consideration immediately suggests two points:

• The Australian company tax is a successful tax in that it generates substantial revenue.
• The integrity of the company tax is particularly important for public finance purposes.

Yet the public debate seems to suggest that the integrity of the Australian company tax system is compromised. Late last year the Tax Justice Network Australia released a report that suggested widespread tax avoidance, if not outright tax evasion. In particular, it claimed:

• The average effective tax rate of the ASX 200 was 23 per cent, and
• If the ASX 200 were paying tax at the statutory rate an additional $8.4 billion could be raised in company tax revenue.

While these claims were well received in parts of the Fairfax press and the Australian Broadcasting Corporation, Australian Treasury officials testifying at Senate Estimates were nonplussed. Referring to the 23 per cent average effective tax rate, Rob Heferen, executive director of the Treasury Revenue Group, told the Senate, “I must confess I was surprised it was so high”.


That comment in turn suggests two things. First, deviations between average effective tax rates and the statutory rate are not unusual and, more importantly, it is very unlikely that $8.4bn could be raised by increased compliance activity.
In short, there is no fiscal free lunch. If government wants to raise more revenue in taxation, it is going to have raise taxes.

When thinking about Australian company tax, the first thing to understand is that financial accounting is very different from tax accounting. The former communicates information to shareholders while the latter communicates information to taxation authorities. There is far more leeway in how firms communicate to shareholders than there is to the tax authorities.

As such, we expect to see differences between effective tax rates calculated from information contained in annual financial statements and the statutory company tax rate. That difference can be calculated from the ATO Tax Statistics.
This news story is reprinted from www.businessspectator.com.au

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Rupert Murdoch’s News Corporation and Telstra Corporation are lending money to their cashed-up pay TV business Foxtel at 12 per cent, claiming tax deductions on the loan and lending the money back to themselves at an interest rate of zero.
An investigation by Fairfax Media has found this irregular transaction helped the Foxtel Partners reduce their tax in Australia, but the ATO seems to have missed out in taxing the interest income. Both companies have responded by saying they comply with tax laws although neither was prepared to address specific questions on the Foxtel transaction.
The $902 million loan appears even more peculiar in light of its high fixed rate and duration, 15 years, and the fact that Foxtel is highly profitable and does not need to borrow that sort of money. Further, Foxtel has refinanced other loans since the Foxtel Partner’s arrangement was struck in 2012 but not this loan. Debt experts told Fairfax Media that Foxtel – a pay TV monopoly acting under government mandate – should be borrowing at less than 4 per cent, one-third of the 12 per cent rate it is paying its parent companies.
News Corp is no stranger to controversy on the tax front. It was awarded a tax rebate of $880 million in 2013 after winning a case against the Australian Tax Office (ATO) in the Federal Court. The large rebate sparked controversy as the Tax Office elected not to appeal the case at a time when the federal election campaign was in full swing, Murdoch’s newspapers were backing Tony Abbott for prime minister and Mr Abbott was ahead in the polls.
Former tax officials have told Fairfax there was angst within the Tax Office following the decision not to appeal the case. Earlier this month, News filed its submission to the pending parliamentary inquiry into corporate tax avoidance. Its executives are likely to be called to appear and testify as to the nature of the company’s tax structures. Along with other multinationals being targeted by the inquiry, News says its activities are legal and independently verified by auditors, Ernst & Young in this case.
“These facts demonstrate that we are incurring and paying substantial tax on our operations in Australia,” said the News submission by chief executive Julian Clarke. This appears to be the case, at least as far as its stated pre-tax profits go. On a deeper analysis however, over the past five years the group’s tax minimisation tactics facilitated $1.24 billion in transfers to other companies within the global group in interest payments on loans alone. News declined to identify which entities made the loans.
“The loan was struck in April 2012 on commercial terms for a subordinated long-term loan, based on external independent advice,” a News statement said.
“The News Corp entities that made the loan are Australian companies, subject to Australian tax law”.
This news story is reprinted from www.smh.com.au
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