Can I pay my employee directly?

[AnonRealEstate]

What is the name of your state? Arizona Phoenix

I have a 100 unit apartment complex in Phoenix AZ. Can I pay my property manager directly, bi-weekly, via direct deposit and/or check or am I required to pay him through a 3rd party company that specializes in employment and pay? I reside in California and my accountant (based in Los Angeles CA) recently told me that I am legally required by AZ law to pay my employees through a 3rd party company and am not allowed to pay them directly. When I asked him why this would be the case he said its because people can easily defraud the government if allowed to pay employees directly and therefore the AZ state law requires employers to pay all employees through a 3rd party company. This does not sound right to me and this is why I am posting this question here and hoping to get a proper answer and explanation. Thank you

 

[stealth2]

What is the name of your state? Arizona Phoenix

I have a 100 unit apartment complex in Phoenix AZ. Can I pay my property manager directly, bi-weekly, via direct deposit and/or check or am I required to pay him through a 3rd party company that specializes in employment and pay? I reside in California and my accountant (based in Los Angeles CA) recently told me that I am legally required by AZ law to pay my employees through a 3rd party company and am not allowed to pay them directly. When I asked him why this would be the case he said its because people can easily defraud the government if allowed to pay employees directly and therefore the AZ state law requires employers to pay all employees through a 3rd party company. This does not sound right to me and this is why I am posting this question here and hoping to get a proper answer and explanation. Thank you

Did you ask the lawyer to provide you with the relevant law to read yourself?

 

[eerelations]

If you have your own payroll person and can pay your employee directly + deduct (and pay on) all federal and state withholdings etc. then you don't need a third party to do this for you.

 

[LdiJ]

What is the name of your state? Arizona Phoenix

I have a 100 unit apartment complex in Phoenix AZ. Can I pay my property manager directly, bi-weekly, via direct deposit and/or check or am I required to pay him through a 3rd party company that specializes in employment and pay? I reside in California and my accountant (based in Los Angeles CA) recently told me that I am legally required by AZ law to pay my employees through a 3rd party company and am not allowed to pay them directly. When I asked him why this would be the case he said its because people can easily defraud the government if allowed to pay employees directly and therefore the AZ state law requires employers to pay all employees through a 3rd party company. This does not sound right to me and this is why I am posting this question here and hoping to get a proper answer and explanation. Thank you

So, far I haven't found anything that makes it a requirement in AZ, but I do find that the rules regarding withholding are a bit complex for AZ. You might want to go ahead and use a third party payroll service for convenience sake anyway. You would still be paying your employee directly, they would just be figuring out the withholding, would remit it to the appropriate agencies, and would cut the check or make the direct deposit for you.

 

[PayrollHRGuy]

As someone in the payroll business, I wish there were states that require 3rd party providers but there aren't.

You need to open accounts with both the state UI and Revenue agencies.
https://des.az.gov/content/applying-unemployment-insurance-tax-account-number

And if you haven't already done so you will need to register with the AZ Secretary of State's office.

 

[Taxing Matters]

This does not sound right to me and this is why I am posting this question here and hoping to get a proper answer and explanation. Thank you

An accountant giving legal advice and getting it wrong? I wish I could say I was surprised by that, but I'm not.

The accountant did indeed get this wrong. There is no legal mandate that you use a 3rd party payroll processor. They can be useful, but if you are willing and able to do all the various payroll deductions, employment tax returns, unemployment comp taxes, etc., yourself then there is nothing to stop you from doing that.