Analyze payroll service terms for tax liability gaps, off-cycle fees, data portability issues, and year-end filing guarantees that affect your business.
Built by Sergei Tokmakov, California-licensed attorney.
Payroll services handle your most critical compliance obligations. These provisions can leave you liable for penalties even when using a payroll provider.
If the payroll provider fails to deposit taxes on time, you—not they—may be liable for IRS penalties. "Tax guarantee" often has strict conditions that void coverage.
Running payroll outside your regular schedule (terminations, bonuses, corrections) often costs $20-50+ per occurrence. Frequent off-cycles add up quickly.
Switching providers requires historical data export. Some services charge for exports, provide limited formats, or delete data shortly after cancellation.
W-2s, 1099s, and year-end filings have strict deadlines. If the provider misses them due to your late data, the guarantee is void but you face penalties.
Payroll submission deadlines are often 2-4 days before pay date. Missing the deadline means late employee payments or expensive expedited processing.
Processing wage garnishments (child support, tax levies, creditors) often costs $5-20 per garnishment per payroll. Multiple garnishments add up.
Common terms in payroll service agreements affecting employers.
Disputes resolved through arbitration.
Monthly fee per active employee.
Employer registration responsibilities.
When payroll funds must be available.
ACH authorization and access terms.
Caps on provider liability for errors.
Employment verification responsibilities.
Agreement length and renewal terms.
Paste service terms below to identify potentially problematic clauses.
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