Small Business Payroll

Payroll can be one of the most complicated things for many employers to deal with. Having a good payroll company or payroll software solution will eliminate your need to spend countless hours calculating your employee's wages and trying to figure out how much you owe in taxes. Most small business owners are trained in the needed skills to start and run their business, but they aren't trained in all the other aspects of a business like Human Resources, Marketing, Consulting, and Payroll. You start your small business in hopes to succeed and be your own boss. A small business owner focuses on what they do best, and payroll may not be one of your strong suits.

It is much easier for a small business to outsource their payroll because it will save time and money. Processing payroll requires a lot of time, data inputting, check writing, and account reconciling. Most small business owners believe they can save money on payroll by doing it themselves, which can be true if you know how to do it. The payroll tax laws are constantly being changed and updated by the IRS and if you don't keep up, you could file improper paperwork or other forms and wind up with a large penalty on your hands. Ask yourself if you have all the necessary skills and knowledge to perform payroll and if you can do it quickly and easily. If you can't honestly answer "Yes" to this question, you need to outsource your payroll.

You should always obtain 2 to 4 different quotes from payroll processing companies. Some payroll companies won't charge you for direct deposit or tax filing, while another company will tack that on as an additional fee to your base payroll fee. Always decide what your wants and needs are and make a list of the companies who are willing to fulfill them.

 Some things you need to consider about a payroll provider include:

• What is their turnaround time? If you have your payroll processed on a weekly basis, how long will it take for your payroll company to send you a report of your payroll hours and cost? 
• Who is responsible for any legal consequences pertaining to mistakes with payroll? Will the payroll company assume full responsibility for their mistakes? 
• How quickly can the payroll company change a pay check if there is a problem? 
• What is the customer satisfaction level with the payroll company?  
• How secured is your personal information? 
• Do they have good customer service representatives? 
• Is there online or desktop software included with your service? Can you use it easily? 
• Can you generate personalized reports? 
• Will they price match their quote with a competitors? 
• How many clients do they have? 
• Can your employees log into a secured web site to view their past paystubs? 
• Do they offer tax filing services and W-2s?

 If you have used a payroll company in the past, contact them to see if they are willing to reduce the price from the last time you used them. Try to make the payroll company fight to keep you as a client. You should always ask companies to price match their competitors; this is the best way to make sure you are getting an affordable rate.

While outsourcing your payroll has its benefits, it doesn't allow you to have control over all the data. Some people like to have control over the payroll reports and other features. If you are one of these small business owners, you need to consider payroll software. Payroll software includes everything you need to calculate payroll and file your taxes each quarter and at the end of the year. Many payroll software programs include time clocks that allow you to obtain an accurate time card for each employee. Time clocks built into the software are great because you can use them to calculate your payroll and you can use them as a report to use in employee evaluations.

If you are ever audited by the IRS or state government, payroll software will automatically generate your past pay stubs and tax forms so you can show them to the auditor. Most payroll software programs include some form of audit protection to help their users. Payroll software also allows you to track retirement accounts, sick leave, and vacation leave, and many other things.

If you do not offer insurance or retirement accounts to your employees, you can probably get by without accounting software, but it will be harder. Small business owners who use hand-written forms tend to be flagged for audits by the IRS. If you decide to do your own payroll without software, you need to keep excellent records in case you are ever audited. Processing small business payroll on your own can also be difficult if you do not keep up with the changing payroll tax laws and other legislation. You must also be responsible for calculating your quarterly and yearly tax returns and filing them on time. You must also prepare your W-2s for each employee and mail them before January 31.

You need to determine what will work best for your company. Perhaps you can afford to hire an employee who can dedicate all or most of their time to payroll. Figure out if the costs outweigh the benefits. Companies like Paychex, ADP, PayCycle, and e-Chex all charge less than $100 per pay cycle to handle all of your payroll needs, plus they will handle your tax payments and are responsible for keeping up with new payroll tax laws.

 Using payroll software on your own could end up costing you a lot of time since you will be sitting there doing all the data entry. While it may not seem like a lot of data entry now, it will once you get started. Payroll requires a lot of time to set up and even more time to input all the necessary information. There may even be some situations when you will have to calculate the numbers manually and then enter them into the software.

Small business payroll is a double-edged sword because you aren't quite big enough to hire an accountant or department to handle payroll and you aren't quite large enough to afford the weekly rates for the payroll companies. This is why it is so important to price shop and create a list of your needs. You can always negotiate with the payroll companies to get a lower rate. For example, some payroll companies will tell you they require a 10% down payment before they can begin creating your account. Don't be sucked into this, you can easily tell them you will pay to 10% once they have established your account, sent you the contract, and you have read over the fine print and agreed to what is on the contract. Once you decide what the best method is for your payroll needs, you can start shopping. Her are a few companies to start with:

ADP - Automatic Data Processing (ADP) offers full-service payroll processing. ADP can handle all sizes of businesses, and will start your base fee depending upon the amount of employees you have. Each payday, ADP will generate a payroll report and email it to you. You can look over this report and approve it or make any needed changes to it. Once the adjustments have been made, ADP will automatically send your employees pay stubs to them in the mail or electronically. The money will be directly deposited into their bank accounts or it will be mailed in a paper check form. ADP will handle all of your tax needs, including W-2 generation, quarterly tax filing, and tax payments. ADP will assume full responsibility for any IRS problems. ADP is a great solution for any small business owner.

Intuit - For many small businesses, QuickBooks is the way to keep track of all their finances and organize reports. Intuit offers a payroll solution that easily integrates with QuickBooks and allows you to calculate your payroll. The Intuit Online Payroll program will manage and pay employees, file proper local, state, and federal taxes, and provide W-2s to your employees. The Intuit Online Payroll program is easy to use and takes a just a few minutes to set up. If you already are running QuickBooks, Intuit will "talk" to it and download existing data, saving you time from data entry. One of the greatest features to Intuit is that it will automatically send you notifications and reminders when it is time to file your quarterly and yearly taxes. It will also remind you when it is payday and when you need to send your W-2s.

Those are just 2 of the popular payroll methods on the market. You can even browse online payroll companies that allow you to do all the work and they will check it over for mistakes. This way you will still have control over the reports, but you don't have to worry about any tax problems.