Fundamentals of Payroll

One thing that all businesses have in common, regardless of products or services, is money. Running a business of any kind takes work, and the end result of that work is (hopefully) a steady income for both employer and employee.

However, in order to run any successful business, money also needs to be spent. Most employers are careful to budget their company’s funds well and don’t want to spend money on unnecessary services. However, one service that an employer might consider adding to his or her company’s budget is that of a payroll service.

A payroll service is exactly what it sounds like: it’s a company that does another company’s payroll. Once hired, a payroll service receives the information on employees’ pay rates and hours worked, will make necessary deductions, and will then issue the payment via check or direct deposit. The employer will receive the report and tax information for each pay period, and voila! Payroll is done and the employer has more time to tend to their business, employees, and customers.

In addition to saving an employer time and preventing stress, there are several other benefits to using a payroll service, which include:

  • Saving Money. According to Vision HR, for “small/medium sized businesses, having an in-house payroll process is a money burner. If your business has fewer than 30 employees, there’s a very good chance that you can save money by outsourcing your payroll operations.” It’s just not worth the money for smaller businesses to have an entire department set aside for payroll, so choosing to hire a payroll service is a wise direction.
  • Benefits for Employers and Employees. Payroll services typically offer direct deposits on payday, which both employers and employees appreciate for its ease. Most services will also have a system in place for keeping track of employees’ retirement plans, paid time off, and health insurance plans.
  • Taxes. Let’s face it: dealing with various tax forms and laws can be a headache for employers. Outsourcing payroll can help ease the tax season stress for employers, especially those employers who may know very little – if anything – about taxes and their laws. According to Business News Daily, most payroll services will report new hires to the government, file quarterly tax reports, withhold employee taxes, pay tax withholdings to the appropriate agencies, and issue W-2s and 1099s at the end of the year. The IRS reports that 40% of small businesses pay more than $800 a year for late or incorrect filings, and one report in BusinessWeek claimed that the IRS issued $4.5 billion worth of employment tax penalties! Using a payroll services helps prevent those kinds of mistakes from happening.
  • Save Time & Prevent Stress. By using a payroll service, it frees employers to do what they do best: their job! Payroll services also will be aware of any changes or updates in accounting software or technologies so that an employer doesn’t have to. They’ll keep business’ financial information up to date and well organized too, often providing both employers and employees easy access to view their records via the internet (including smartphone apps) at their own convenience.

If you’re considering using a payroll service, and if these points have convinced you to begin the search for one of these services, you may be wondering what you ought to look for in a company. Here are a few things to look for or consider.

  • Find out what services the company provides. While most payroll services will offer many of the same things, it’s still wise to make sure you’re getting the most bang for your buck, and that you’re meeting the needs of your company. Make sure the payroll service company you choose offers what it is you’re looking for.
  • How long has the company been in business and how do their other clients rate it? It’s wise to go with a reputable company, as this can save time and money in the future. There are payroll services locally and online, so do some shopping and researching before just choosing the first one.
  • Cost. Not only do you want to shop for the best price, you’ll also want to make sure there aren’t any hidden fees or if quoted prices are ever subject to change. 

     

    Life can be busy…especially for business owners! Utilizing a payroll service frees up time, money, and minds. If you’re a business owner who’s doing your own payroll, you’ll definitely want to consider utilizing this kind of a service.