Payroll Taxes and Float
It’s almost summer, so let’s talk about float.
No, not the fun floating in an innertube – the “float” we are talking about is the delay between making a payment and receiving payment. Specifically, payroll taxes, since at Greenshades, we know payroll.
Most payroll providers, both outsourced and in-house, have a float. When your company uses a provider that has a float to process your payroll, you must pre-fund an account for payroll taxes. This means that your money goes into the account well before payments are due, the company holds the funds, and when the time comes to pay taxes, the provider pays the government on your behalf.
What does a pre-funded payroll tax account offer? For some companies, an advantage is not having to remember due dates or make payments directly. The disadvantage is losing control of that part of your cash flow since it takes those funds out of your reach until taxes are due – which could be weeks later. You won’t be earning interest on that money during that time either, so if keeping money within reach for as long as possible is important, a pre-funded tax payroll tax account may not be ideal.
Something else to consider is using a payroll provider that requires a pre-funded payroll tax account will add extra steps and time to you paying your payroll taxes. The funds must be deposited by a due date, and the process of paying the taxes falls on the payroll provider. While extra steps can be a good thing, in this case, extra steps are just more work.
Outsourcing to a payroll provider means entrusting them to hold your funds and pay your payroll taxes on time. What happens when they have significant errors, outages, or schedule delays? While convenient, you’re placing trust in a third party to pay your taxes on time and not incur penalties. Of course, errors and outages are rare, and many payroll providers are reputable – but it is still giving up control of a significant process to another company.
So, if you don’t think the risk of outsourcing with a payroll provider that has a float is worth it, you may be wondering: are there other ways to pay my payroll taxes on time efficiently?
The Greenshades Solution
Yes! Greenshades, for example, is a cloud-based insourced payroll provider that has NO float. This means that we do NOT require pre-funding payroll tax accounts. We help you run payroll and alert you when your payroll taxes are due, but we don’t take or hold your funds. We understand that keeping control over your cash flow is essential. When we alert you of an upcoming payment deadline, you can easily schedule the payment yourself and pay directly from your funds without a pre-funded account.
At Greenshades, we believe that the best payroll process puts you in control of your money and your schedule. Seeing and managing your payroll taxes is a great way to ensure there are no errors – and rather than doing it all for you, we supply you with the tools and resources to run payroll effectively and efficiently. We save you time, resources, and money by putting the power of payroll and compliance in your hands.
We are Greenshades. Learn more about our no-float payroll tax process and schedule a free demo!