Pros Run payroll automatically Availability in all 50 states Top-notch...
30-Second Summary: If you're a business owner, you know that payroll...
30-Second Summary: Payroll does not have to be the source of headaches...
30-Second Summary: Using direct deposit for payments to employees...
30-Second Summary: “Sell me this pen” as an interview question...
Managing payroll is often considered to be one of the most complex activities in a business. This is evident from the fact that one out of every three startup owners is penalized by the IRS for payroll-related mistakes. Apart from the stress and hassle related to tax filing problems, having to make higher tax payments can hurt your business’s bottom line, and payroll processing errors can lead to unhappy employees.
A modern solution for avoiding these mistakes is to hire a payroll service. If selected wisely, the decision can completely automate your payroll process, thereby allowing you to spend your precious time growing your business.
Let us explore what payroll service is and what factors should be evaluated in picking the right payroll service for your small business.
A payroll service provider is an outsourced partner that takes care of your entire payroll process, including payment calculations, payroll tax calculations, paycheck dispatches, and year-end account balancing. With their extensive expertise, payroll service providers offer a hassle-free payroll solution for all of your payroll processing needs.
The primary role of a payroll service provider is to ensure that all employees are paid accurately, and that payroll tax calculations are free from errors. Many payroll companies also offer online payroll solutions (cloud solutions), through which you can view, analyze, and approve payroll payments.
The payroll service providers offer a range of solutions. Some of the most common services include:
The first, and most complicated, step in the payroll process is the recording of employee time. This is especially true for businesses operating in service-oriented, employee-intensive industries. For instance, hospitals employ a wide range of staff working different shifts. The standard shifts for each staff type also vary, and it is difficult to manage all the complexities with simple software. Time and attendance management services provide you with the correct number of hours for staff, making it easy to determine final pay.
This service involves taking care of the taxation aspect of payroll, such as withholding taxes, calculating final tax liabilities, and submitting the required forms to the tax authorities. The best payroll services also offer a guarantee, protecting your business from any potential fines or penalties related to tax filing or other bookkeeping errors.
Paycheck service can be a separate and standalone service, or it can be integrated into the payroll services software. The service involves making payments to the employees based on their preferred payment method, whether it’s a paper check or direct deposit. This makes it easy for the business to pay via a single method and transfers the hassle of paying through a different method to the outsourced partner.
Employee self-service, commonly referred to as ESS, allows the employees to log their time, attendance, vacation time, and other special requests from a portal. The employees can also use it to view their payroll, taxes, and other entitlements, plus it can provide digital paystubs. ESS serves as a medium of interaction between business owners, human resources, and employees.
A key component of all payroll software solutions is reporting. Payroll service providers offer detailed reports that can be used to make business decisions. Some service providers also offer consultancy services and may provide valuable insights into employee performance.
There are numerous benefits of using a payroll service. Some of the key benefits include:
A payroll service saves you precious time. Payroll is not a value-added activity that needs to be retained in-house. Instead, it should be outsourced to an expert as soon as practically possible. The time saved can then be used to expand the business.
Cost-saving is one of the major advantages to outsourcing anything, including payroll. Retaining the payroll in-house requires dedicated resources in the form of staff and software. Moreover, mistakes can be costly, so utilizing a fixed-price solution can make everything payroll-related easier, including forecasting future positions.
Perhaps the most significant benefit of a payroll service is accuracy. There are tons of rules and regulations related to payroll services, and especially for small business owners, it can be really difficult to stay on top of all the latest developments. With a reputable payroll service, you won’t spend sleepless nights thinking about whether you overpaid or underpaid employees or made any mistakes in tax submissions.
There are thousands of payroll service providers, each offering a range of unique services. However, your choice of payroll service provider should be backed up by a thorough understanding of your business’s needs, the credibility of a particular payroll partner, and the potential for long-term collaboration.
You can use the suggested list below to evaluate the right payroll service for your business:
The first factor to consider is the range of solutions offered by the payroll service provider. A full-service payroll service usually includes payroll software, management of wage garnishment, payroll taxes, self-service payroll options like tax withholding and allowances, etc. Some payroll processing providers provide extensive HR solutions, which is especially beneficial to small businesses. These service providers may make it easier to manage employee benefits, vacation scheduling, and more. Some service providers only offer attendance and calculation services, whereas others, such as Onpay, offer more comprehensive solutions, including ESS and a fully automated payroll process. You may not need all the solutions now, but it is important to plan for the future and choose the right partner from the onset.
You should select a payroll provider with a history of proven success, such as Paychex or Onpay. It is important to prioritize quality over cost in selecting an appropriate payroll service provider. A small cost savings on the front end isn’t worth it, if there’s any chance you might experience bigger problems working with your partner down the road.
The mechanism of recording attendance and generating payroll varies from industry to industry. You should preferably select a partner that specializes in your industry or one that offers dedicated solutions for your business type. If you run a very small business without many complexities, you can get away with a simpler solution, but if you employ different types of workers, an advanced solution is probably necessary.
If you are choosing a payroll service that will be used by employees, it is important to pick one that offers a user-friendly interface. Not all employees are tech-savvy, which means the interface needs to be as simple as possible. Employees should be able to select tax withholdings, print pay stubs, and perform their own time tracking with minimal training or supervision. Another important function is that they should be able to view and print their tax forms.
Price is, of course, a key consideration in every business decision. You need to perform a cost-benefit analysis to ensure the price paid for the solution does not outweigh the expected benefits.
Integration with other software is often an important consideration, particularly if you want to minimize manual work. Be sure to evaluate whether or not the payroll service can be integrated with your operations and accounting software. Some accounting software providers, such as QuickBooks, also offer a payroll service. If you’re already using QuickBooks for accounting, utilizing them for payroll could be an easy fit. You should preferably In general, it’s a good idea to use the payroll service offered by your accounting software provider unless you have a good reason not to.
The responsiveness of payroll service providers to customer complaints greatly varies. You would not want to choose a partner that takes days to respond, while your employees threaten a strike for non-payment. Therefore, the customer support aspect should also be a key consideration in your search for the right service provider.
Payroll is a function that best is outsourced to small businesses, medium-sized businesses, and large companies. It will help save time and money and ensures that all of your payroll and tax calculations are accurate. Do consider the cost, features, reputation, interface, integration, and customer support of each service provider to arrive at the right choice for you. We recommend using only the best and proven companies, such as Paychex, Onpay or ADP.