I had two people ask me this week “Do I have to file an income tax return in Philadelphia?”
The city is clear in this statement on its web site:
“If you are paid by W-2, confirm that your employer is withholding the City Wage Tax. If they are you have no filing obligation with the City.”
On the other hand, if you have earnings not reported and paid through a properly designed payroll system then, yes, you do file a separate tax return with the City of Philadelphia.
How much does payroll service cost for a very small business? This is a simple question without a simple answer. As we might suspect, the answer is wrapped up in the details.
1. Service contract – Who pays penalties for screw-ups and responding to an audit? How reliable is the provider’s assurance? Keep in mind that a high percentage of companies are eventually audited and many wind up paying penalties for inadvertent errors.
2. Personal service – When a question comes up who handles it? Do you have access to their cell phone number? How speedy and reliable are they based on reputation and past performance? Do they have the ability and the authority to ‘get it done’?
3. Local taxes – Handling local tax issues can be more demanding and time-consuming that state and federal wage tax issues. Is this considered in the fee?
The range of market prices I see for very small businesses is $0 to $120 per month. I recently developed a customized proposal for a new 2 employee client at $65 per month that includes strong guarantees, professional service and all local tax services. IMO, that is likely the lowest amount that a CPA could charge for the highest quality payroll service.