can get away with being a little disorganized about everything else
in your business but payrolls. Handling payrolls could become a major
headache both for you and your staff. Therefore, it is best to pay
attention to this aspect before anything else while setting up your
you need a payroll processing system?
you're the sole proprietor or in a partnership firm then you don't
need to bother about paying yourself/yourselves a salary. However, if
you have employee(es) then it is best to have a proper payroll
management system in place.
you just have a few employees, then you may use a software program or
an online self-service program to handle payroll processing. But as
you grow and hire more employees, you should consider outsourcing the
entire payroll processing.
proper payroll processing is essential?
from keeping your employees happy and clear about what they are being
paid, you need payroll processing for tax filing. If you have a
retirement plan for your employees – which you should – then
added documentation, contributions, etc. also have to be handled. All
this requires proper management of employee salary.
are the various payroll processing services available?
services come in different flavors. Broadly they can be categorized
into Basic, Enhanced and Assisted.
is a type of Self-service Payroll processing, where you just get the
software engine to run the payroll. You are responsible for
maintaining the information such as the tax rates, salary rates and
deductions. You are responsible for running the payroll and
disbursing the paycheck to your employees. You are also responsible
for all tax filing, maintenance of tax records and sending necessary
forms (such as year-end W2’s) to your employees. Naturally, they
are the cheapest options amongst all payroll services.
is one step up from the basic service. You are still responsible for
maintaining the rates and filing taxes yourself. However, the system
offers assistance in the form of online tax filing, direct deposit of
salary into your employee’s account, integration with certain
standard accounting software systems, payroll forecasting etc, with
are a few provides who offer both Basic and Enhanced payroll
Intuit Online Payroll – Intuit lets you
prepare payroll on their online engine. It comes with a QuickBooks
Enhanced Payroll system that lets you pay employees, pay taxes, file
tax forms with a few clicks and starts at less than $23/month. They
also offer QuickBooks Assisted Payroll that lets you access Expert
Payroll Assistance, Pay Employees in QuickBooks, ensure no tax
penalties and it starts at $69/month.
people like to use the Assisted Payroll Services which do all the
filing for your business. Here are some popular ones in this
Paychex – You have to pay approximately $55
per pay period, for one check, checks cut, with filing and direct
deposit. It works online and Paychex assigns a specialist to each
Compupay – I have been using this company
for a year now. They are pretty good. Even though I am a small
business, I have been assigned a specialist who responds to my calls
and emails usually in less than one business day. I pay about
$32/month. They take care of all my tax filing. There is a separate
charge for year-end W2 processing though; but it’s not too bad.
I outsourced my payroll processing, I was responsible for my tax
filings. I missed filing a couple of times and ended up paying
penalties. Trust me; outsourcing this process is well worth the
investment both in terms of cost and stress.
be also aware of the downside, particularly for the assisted payroll
Sometimes there are hidden fees that you
are not aware of. For example, I got hit by a fee at the year-end for
W2 processing which I was not aware of. You can avoid the surprise, and
sometimes negotiate down the fee, if you are careful upfront, before
signing the contract.
They usually take out the payroll amount
and tax dues a few days before, even though the taxes are not due until
several days after the payroll date. On one side, it’s good because you
know that these payments are set aside; but on the other side it does
negatively impact your cash flow.
overall this business process is well worth done by someone else, so
that you can focus on your clients.
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