13 Mar Payroll Solutions for Small Businesses
Small business payroll is very important for any enterprise.
How do small business deal with payroll? There are several options for a small business to do their payroll. The options are: do-it-yourself, hire in-house bookkeepers, get a payroll software service, or outsource payroll tasks.
We define a payroll system as an automatic process that helps businesses comply with legal and tax requirements, making the payroll process simplified. Any small business owner will find it easier if there’s a payroll system in place. However, payroll is a complex process that might take hours away from your precious time and sometimes leads to costly errors.
But regardless of which option you choose, you can customize the features that suit the needs of your business whether it’s getting a software or outsourcing specialists to do the payroll.
Here, we discuss the main features and the ups and down of each option.
Option 1: Do It Yourself
A knowledgeable, tax savvy, and confident entrepreneur has always the option to simply do the payroll himself or herself. This is possible if you have two to five employees and have ample time to handle everything yourself. This method is proven to be cost-effective.
However, the owner should be aware of the risks involved in getting the accuracy of facts. DIY is prone to error. It’s not just about giving employee’s paycheck. The usual problem is that small business owners don’t realize how much this process would cost them. DIY payroll for small business may be the best if you want to cut the business costs. Unfortunately, this is time-consuming and prone to errors.
Make sure you are confident in doing the DIY correctly.
To get started consider this step-by-step guide for DIY:
- Have all employees complete a W-4. Form W-4 is where they file their status and track their personal allowances. You also have to track W-2 forms. A W-2 form is a federal form which you needs to be updated annually. You have to know their benefits and keep track of their attendance records. Make sure that you keep those reports, too.
- Sign up for Employer Identification Numbers. Make sure you have Employer Identification Number or EIN ready. You may apply for EIN and get state EIN Number as this is used to identify a business entity and anyone who pays employees.
- After choosing your payroll schedule, determine their withholding income taxes. The federal and state taxes to pay your employees and resources can be computed through a reliable paycheck calculator. Keep track of both the company and the employee’s portion of taxes as you do this.
- Pay taxes. Submit your federal, state, and local tax deposits which are usually done on a monthly basis.
DIY payroll is often a problem for people who are unorganized. It is important that you keep accurate and valuable information; otherwise, you will have no way of proving it or backing up those files.
Option 2: Keep it In-House, Hire an expert
If doing payroll yourself doesn’t work for you, hire someone that has the expertise in doing payroll for small and medium-sized business.. You can employ a team of HR professionals or accountants to work full-time to process your payroll, ensuring your tax payments and filings are done efficiently. This can also be a good option if you have a stable and predictable number of employees. This option may be difficult if your employees fluctuate in size. If that happens, you may hire, fire and train employees again for these tasks. Unfortunately, this alone can waste your time, money, and resources.
Option 3: Get a Reliable Software payroll provider to do most of the work.
If you are unsure how to do payroll yourself, you may use helpful software and online tools. These payroll software tools offer business owners a reliable way to record, store, gather important payroll information. You can use payroll software that can reduce the risk of fines due to errors. With a payroll software, you can easily automate processes and edit major changes when necessary. A payroll software provider is one of the best options to stay organized and can be handy with other payroll-completion software on this list.
Online payroll system stores all information on the cloud, and then the owner pays a monthly usage fee. Other software offers similar feature but the data are stored in the business owner’s computer instead of cloud.
Option 4: Outsource Payroll
There are payroll services for small businesses these days. Outsourcing a firm to do the complete payroll duty is considered one of the most cost-effective options for many small-business owners. This is done by getting bookkeeping services. Experienced bookkeepers can handle the tricky payroll tasks.
However, some consider this the most expensive option, but it is proven reliable. Many small business owners have experienced positive outcomes such as efficiency, increased accuracy, more savings, enhanced feasible report, and consistency. This also provides less supervision to train an employee.
Payroll must be completed accurately, with all tax filings and assigned deductions. Payroll outsourcing claims to take the pressure of completing payroll off the shoulders of small business owners.
Payroll activities are known to make significant errors and cost business owners penalties and fines. As a result, small business owners opt to choose Do-It-Yourself Payroll, using the software or other available tools to handle their business payroll solutions. With the free software available online, however, doing payroll is now possible and requires a whole lot of patience and commitment to accuracy.
Take note that payroll is a complex process no matter who handles it. And this list does not exhaust all your responsibilities as a small business owner. For a specific advice, make sure to go over federal and stare requirements or consult a professional.