Protecting your veterinary practice payroll

Protecting your veterinary practice payroll

Weigh the risks and benefits of outsourcing payroll and watch your worries fade away.
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Sep 01, 2013

Not only does payroll represent one of the highest costs for most veterinary practice budgets, it can also carry legal burdens. But whether you contract an outside service or decide to process payroll in-house, by keeping aware of the many risks it poses, you'll do well to eliminate any potential legal trouble in your practice.


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Many practices choose to outsource to companies that specialize in payroll processing, mainly for simplicity and to keep the duties segregated among several parties. There are many benefits to outsourcing payroll, not in the least the cost savings related to the efficiency of using a third-party specialist.

Doing your research

Still, outsourcing can intensify certain risks. If you already have or are considering contracting a payroll company for your practice, do your research. When investigating payroll companies, ask for the following:

1. Financial statements and other company information. There is a great deal of financial risk involved when you allow a payroll company (or anyone else) access to employee-due money and related trust funds. Trust funds are legally mandated employee tax withholding that are entrusted to the employer for timely remittance to the appropriate tax agencies. Have a good grasp on the history, reputation and financial position of the payroll company you're considering.

Investigate the company's website, talk with your attorney and accountant to get their opinions, and speak with references, especially other veterinary practices. Many payroll firms are privately owned, so financial statements may not always be obtainable. Interview the owner of the company; don't rely solely on salespeople. Ask for a tour and visit the company's location.

2. A detailed description of the procedures used by the payroll company, and proof that it prepared and remitted required returns and deposits to various agencies. This will provide you with a better understanding of how the company operates, as well as help you design practice procedures to monitor that the company is following through on its contracted responsibilities.

3. Documentation of the service provider's current bonding. Once you sign up with a company, make sure that it sends you proof of bonding annually. Generally, the payroll provider's insurance company will send this to your practice on request.