Which payroll method is best for your small business ?

Apr 2, 2017 by

Which payroll method is best for your small business ?

While doing payroll, there are a lot of things to keep in mind : locale laws, tax laws, regulations, medical taxes, and a lot more. If you don’t want to start using a full payroll service just yet, there are other ways by which you can automate your business’s payroll.

There are three ways in which you can do this : manually, hire a part-time accountant or use a payroll software solution. There are also varying combinations of these three methods that you can customize to your need. For example, using basic payroll software with a part-time accountant.

The most popular payroll option for small businesses today is payroll software. Larger businesses usually require the work of a full-time accountant. The software method is better than complete manual payroll and it is a good option that saves time and money.

 

Most common payroll mistakes to be avoided :

It is necessary to pay attention to the most common problems of doing manual payroll.

1) Errors: It is possible to make an error at different steps of the payroll process. Maybe you forgot health care deductions or made a mistake in keeping up an employee’s hours or wages. To avoid these errors you need to become more familiar with the payroll process.

2) Deadlines: You need to keep up with federal and income taxes deadline. It is possible to let the payroll software submit everything for you automatically.

3) Penalties: If you make an error, you may find yourself required to pay a penalty. Some software companies are confident enough to protect you against tax penalties and pay a portion of these in case of an error.

 

Which Payroll System is Best for You?

There are three main types of payroll systems available for businesses today, and there are pros and cons to each one of them. Choosing the right system for you depends on the size of your business and your preference.

 

Manual Payroll

In manual payroll, you work the old fashioned way. It’s just you and your spreadsheet software.

Pros: It is the cheapest and most people are familiar with it.

Cons: Time-consuming and has the highest chance of errors.

Payroll Software

The payroll software can be either a desktop application or a web-based software that automatically calculate all deductions and payments for you.

Pros: The software relieves you of some hard work while still keeping you in control. You can perform complex calculation easily. It’s much faster than the manual way.

Cons : Most payroll softwares still require you to make bank deposits, make reports and file taxes. They vary form company to company. You may also have to make manual calculations of your local taxes.

 

Full Service Payroll

 

This is like a combination of the payroll software and a human specialist that works with you and handles your tax responsibilities.

Pro: it covers all tax penalties. You have the control of accessing your account and you save time while handling deposits and filings on your own. The specialist uses the data you provide and does everything for you.

Cons: You are usually required to give up full control of your account . This is also by far the most expensive option .

 

How Should Your Business Do Payroll?

Deciding between the different option may seem complicated at first. But if you’re still working with manual spreadsheets, it is a good idea to consider making your system more efficient. Using a software seem to do the trick in most cases.

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