Direct answer
As of August 2026, a medical practice should control payroll taxes through documented payroll approval, current deposit-schedule review, independent confirmation of electronic deposits, quarterly return reconciliation, and restricted system access. Outsourcing payroll does not remove the employer’s responsibility to verify that wages, withholding, deposits, and returns are complete and timely.
Separate payroll preparation from final approval
The person entering hours, compensation changes, bonuses, deductions, bank details, or new employees should not have unchecked authority to release payroll. Require documented owner or manager approval of the payroll register and funding amount.
Verify deposits outside the payroll report
Confirm federal and state tax withdrawals against bank activity and official payment confirmations. Retain electronic trace or acknowledgment numbers and investigate rejected, returned, duplicated, or late payments promptly.
| Payroll control | Evidence to retain |
|---|---|
| Employee and pay changes | Approved hiring, compensation, banking, withholding, benefits, and termination records |
| Payroll release | Final register, approver, funding amount, pay date, and exception review |
| Tax deposit | Required schedule, liability date, payment amount, confirmation, trace number, and bank clearing |
| Quarterly filing | Filed return, acceptance, Schedule B when applicable, deposit tie-out, and general-ledger reconciliation |
| Year-end reporting | Forms W-2 and W-3, contractor forms, corrections, recipient delivery, and electronic filing acceptance |
| Provider oversight | Engagement terms, access list, authorization, notice routing, service reports, and contingency plan |
Reconcile every payroll return
Tie quarterly and annual payroll returns to payroll registers, general-ledger wages, tax liabilities, deposits, Forms W-2, contractor reporting, and the applicable tax accounts. Resolve differences before rolling them into the next period.
Maintain oversight of third-party providers
Document provider roles, filing authority, notices, contact information, service changes, and backup access. Route tax notices to a responsible person rather than assuming the payroll company receives or resolves them.
Primary sources
Frequently asked questions
Does using a payroll company transfer payroll-tax responsibility?
No. A provider may perform agreed tasks, but the employer should verify deposits, returns, notices, and account access.
Is the payroll deposit schedule based on how often employees are paid?
Not necessarily. Federal deposit schedules depend on applicable IRS rules and reported tax liability, including special rules that can change timing.
How often should payroll be reconciled?
Review every payroll before release, verify deposits as they occur, and complete formal reconciliations for each filing period and year end.