3 Solutions for Small Business Payroll How does your business manage its employee payroll? The size, complexity, and requirements of your workforce will determine what payroll solution is best for you and your employees. Investigate the possibilities, and choose the payroll processing method that promises you the most functionality for your budget. Manual Payroll Fifty percent of the average HR department’s time is spent processing employee information and answering questions, and 35% of that time is spent on payroll alone (Sage). Processing your payroll manually requires utilizing timecards, spreadsheets, and your business checkbook in order to: •
Track and calculate employee hours, wages, time off, sick days, and benefits.
• •
Calculate required payroll taxes, as well as federal, state, and local withholding. Print pay checks and/or distribute funds into employee bank accounts via direct deposit.
•
Print and file payroll reports, year-end tax documents, and W-2 forms.
Manual payroll is appropriate only for small businesses with just a few employees. If you choose to calculate your payroll manually, be aware that The American Payroll Association has estimated that error rates from manually calculating employee payroll can range from a low of 1% to as much as 8% of your total payroll. Regularly audit your manual payroll processes in order to make sure everything is running smoothly and that errors aren’t affecting your business. Payroll Software Using specialized software to manage payroll for your business enables you to have more control and flexibility for your business’s needs. Most payroll software comes with the same set of basic features, as well as a variety of special options to fulfill the specific needs of your business. •
Payroll software can help you track employee payroll history including sick time, paid time off, vacation time and salary history. It can also include details regarding employee performance, reviews and goals, as well as store personal data and emergency contact information. •
You can use the software to transfer payroll and tax information to the general business account ledger. When choosing a payroll software solution, make sure that it is: compatible with your current system; easy to use; functional online or in the cloud; and provides free automatic updates of IRS tax tables and applicable employment regulations.
Payroll Outsourcing Services When your business employs more than a handful of workers, maintaining employee time and attendance and payroll processes can take up a significant amount of your human resources department’s time – even with the assistance of payroll software. •
Using a payroll service can help you reduce costs, reduce staff, and help you to devote
time to more important matters: your business, employees, and customers.
•
Payroll services providers offer a wide variety of services, from basic payroll management
to nearly the entirety of your HR department’s workload. Employee data is transmitted securely, and confidential information remains safely in the hands of the third-party provider – not whoever has access to the key to your filing cabinet. No matter which solution you choose, be aware that you are ultimately responsible for making sure that all applicable employment and wage regulations are followed, and that your employee withholding and payroll taxes are paid accurately and on time. Check reviews to ascertain that your payroll software or payroll service provider has a good reputation for managing small business payroll accurately and effectively. If you choose to stay low-tech with a manual method, keep on top of your employees to make sure that you don’t have a problem with time theft, buddy punching, or payroll errors.