At the end of 2008, I wrote a post about outsourcing that generated quite a bit of interest, so I thought it was worth raising this topic again. After years of battling with my business payroll taxes (I have an S-Corp and thus have to file quarterly payroll taxes and a separate year-end tax return for the business), I decided to hand that task over to my accountant and so far I’m really pleased with how it’s going. For $40 per month, my accountant will run payroll (I’m the business’ only employee, so this isn’t a monumental task), automatically withhold the appropriate tax amounts from my gross pay, file my quarterly payroll taxes and issue my own W-2 at the end of the year, along with 1099-MISCs for anyone to whom I subcontract more than $600 worth of work.
I decided to throw in the proverbial towel on this task for a variety of reasons: most of all, I just hate accounting. In addition, the paperwork burden associated with corporate taxes increases as you make more money. If you have an S-Corp and you owe more than $2,500 per quarter in federal income tax, you have to electronically deposit your payments every month, rather than sending a check in once per quarter. Then if you have subcontractors earning more than $600 per year, you have to collect W-9s from all of those people, calculate who you paid more than $600 and issue 1099s to them. Although I write all of the appropriate deadlines on my calendar, on a couple of occasions I’ve forgotten to initiate the electronic tax deposit soon enough; the deposit takes a couple of business days to process, so if the due date is on a Monday, you have to initiate the deposit by the morning of the Thursday before. The IRS no longer offers printable 1099-MISC forms on its website, so you have to order the forms by phone and they take 3-5 weeks to arrive…do you have a headache yet?
I decided to outsource this task because it passes the two main outsourcing-qualification tests: I don’t enjoy the task and the outsourcing will pay for itself immediately. It’s gotten me thinking about other tasks to outsource, but for now I feel that at least I made the right decision by admitting defeat on this one! Readers, any tasks you’re thinking of outsourcing in 2010?