The small business community has been rocked by allegations that widely-used outsource payroll services provider MyPayrollHR abruptly ceased operations leaving its clients 250,000 employees without paychecks. The shock of this news has left small businesses to wonder if there is any way to avoid similar risks while outsourcing their payroll services, an operational necessity for many.
The FBI and New York State Department of Labor have confirmed they are investigating the company on allegations they moved nearly $35 million to their own bank accounts before ceasing operations.
The good news is yes. While there is no sure-fire way to prevent fraud and theft in the world we live in, The allegations facing MyPayrollHR and its parent company’s CEO Michael Mann are headline news specifically because of the lack of widespread fraud in the industry but for small companies with razor-thin profit margins, the thought of having spend added resources on in-house accounting & payroll functions is a daunting one.
THE ALLEGATIONS FACING MyPayrollHR
MyPayrollHR is (or rather was) a Clifton Park, NY based company offering outsourced payroll services to more than 4,000 primarily small business customers. Their clientele ranged from companies with multi-million dollar revenue streams to small startups and family businesses run out of the home.
On September 5, 2019 MyPayrollHR sent a brief but shocking message to its clients, “due to unforeseen circumstances, we are no longer able to process any further payroll transactions.” Since that time their offices have remained dark, as have those of their parent company, ValueWiseCorp. Its CEO Michael Mann has yet to make a public statement.
The abrupt closing left its 400 small business clients, with a combined workforce of over 250,000 employees, holding the bag. The immediate impact of course is employees paychecks went unprocessed and therefore unpaid despite these clients having already remitted funds to MyPayrollHR to the tune of $35 million.
Another very problematic issue for these small businesses is the matter of payroll taxes. Mann’s company was often handling these transactions for their clients as well, and the IRS requires small businesses to settle payroll tax collectibles no later than 30 from scheduled deduction. For a small company, the loss of a payroll as well as a months worth of tax withholding can be devastating.
It was California-based direct deposit processor Cache Financial Services that first alerted authorities of irregularities, accusing MyPayrollHR of of moving $26 million earmarked for small-business employee paychecks to its own bank accounts at the end of August of this year. When Cache hadn’t received requested payments from MyPayrollHR they notified Federal authorities.
For its part, Cache Financial Services has set up a hotline for employees impacted by the alleged fraud. You may file a claim and speak to a representative by calling (877) 579-8557.
THE BENEFITS OF OUTSOURCING YOUR PAYROLL
The primary reasons for small businesses to outsource payroll come down to cost, convenience and specification. In addition to avoiding the expense of retaining a team of full-time Accounts and Bookkeepers, business owners can shield themselves from potentially damaging regulatory penalties should their payroll financials not comply with tax and labor codes.
Below are among the most listed reasons for outsourcing payroll services, as given by small business owners:
Get the best in payroll processing for less.
Deflect unwanted and unwarranted government interference.
Protection from check fraud artists who could/would raid bank accounts.
Take advantage of otherwise unknown Tax Credits.
Upgraded privacy levels for employees.
Having one less thing to worry about.
Call on payroll tax experts at no charge.
Because payroll-outsource companies are constantly upgrading and improving their ability to provide the best service, they stay on top of tax & regulatory changes and regularly upgrade their software and systems.
Occasionally everyone misses a deposit or filing deadline, forgets a form or otherwise makes a mistake that results in a penalty that YOU have to spend a great deal of time resolving and usually end up paying the penalty anyway. Outsource your payroll greatly minimize the chance that your company will pay any penalties or interest due to missed deposits, late filings, bad calculations or other clerical and computational errors of your payroll taxes.
IN-SOURCING YOUR OUTSOURCED PAYROLL SYSTEM
One way to achieve most of the tangible benefits of utilizing an outsourced payroll company while still maintaining direct control of the process is to utilize Virtual Staffing. This can be a particularly attractive option for very small companies with less than 25 employees.
At Stafftronix Virtual Assistants we offer a My Virtual Bookkeeper service provides you the ability to interview and hire your own payroll processor from among our talented and bonded staff. Many of our virtual assistants assigned to this service are certified Accountants.
All our bookkeepers & accountants have tangible experience in the field from top-level employers such as Deloitte, Chase, Bank of America and others. While its important to note you will experience many of the benefits of outsourcing to a payroll company, you are still technically processing your payroll in-house.
What does this mean? In essence you are contracting one of our Virtual Assistants to handle all the necessary preparations, reports, transfers and transactions, but these are done directly through you and your bank and/or disbursements providers. You are also technically filing your own payroll tax responsibilities, even if it is your Virtual Bookkeeper handling the day-to-day tasks.
This carries both responsibility but gives you control of the process. The job of your Virtual Bookkeeper is to make this a seamless process where you need only scan and approve reports and disbursements, or make necessary transfers yourself if you’re so inclined.
If you have more than 25 employees you’ve probably outgrown this sort of option. That said, our structure allows for you to look at developing a mini-BPO (Business Process Outsource) team who can help your growing enterprise meet your needs.
One of the biggest benefits of in-sourcing your payroll and bookkeeping needs is that you develop and maintain a relationship with your bookkeeper(s) with direct access to email, call or video conference with them. All Stafftronix Virtual Assistants are bonded for your security, and your contract is directly with us. We don’t handle any of your payroll o tax funds, but we ensure the work is done in a reliable, timely and confidential manner.
Technology is now making payroll easier to enter. In the last few years Internet interfaces have been perfected. These let you enter and review your payroll from any Internet connect computer around the world. While as a business owner you don’t want to be bothered with the mundane details, there is no reason the work must be shifted to a large, faceless company where your only means to communicate with is through a toll-free customer service number.
When you work with Stafftronix you not only have a direct line of communication with your Virtual Bookkeeper but an assigned, dedicated Account Manager as well. Your Account Manager is responsible for direct oversight of your outsourced staff including troubleshooting technology issues, training opportunities as well as establishing short & long-term project goals to improve services provided to you.
A truly professional payroll outsource provider will have CPAs on staff that you can consult with and that’s exactly what you’ll receive with My Virtual Bookkeeper. Your Account Manager will be a CPA and in most cases your Virtual Bookkeeper will be as well.
In light of the MyPayrollHR allegations, business owners large and small will be re-evaluating the risks involved with outsourcing their payroll needs, but at the end of the day the benefits far outweigh the risks. You can mitigate these risks even further by in-sourcing the process with a Virtual Assistant and maintaining a level of control you cant receive when dealing with larger outsourced firms.
Stafftronix Virtual Assistants would like to discuss your needs and show you how we can provide you an option that is efficient,, confidential and secure. We can provide you a solution that helps you avoid the sort of disastrous incident that have befallen the more than 250,000 employees whose companies contrasted with MyPayroll HR.