Many years ago, when I had my own company, I had a payroll of 20 people and did the payroll every two weeks by using an Excel spreadsheet to calculate the taxes, total deductions and net pay. Then I manually wrote out the paychecks and the pay stubs. It was a nightmare taking me over three hours to complete. Then I would walk over to the bank and submit the Federal and state deposits to cover the payroll. “There must be a better way,” I exclaimed. I found a payroll company to handle the payroll, here is what I learned:
You must choose a payroll company that is qualified and proficient. I needed to learn the tasks that a payroll provider can provide, how much these services cost, the benefits they offer and what to look for when choosing one. I found an online payroll service, which automatically calculates how much an employee should be paid each pay period and deposits the funds via direct deposit or check. The great task that they can do is prepare the required reports that must be filed with the federal, state and local governments on a quarterly basis.
Most online payroll services integrate with account software as this gives businesses the ability to keep more accurate financial records. These services withhold employee taxes, file quarterly payroll tax reports and pay tax withholdings to the proper state and federal agencies. They also issue employee W-2 and 1099 forms at the end of the year. Some online payroll services have systems that make it easy for businesses to set up and monitor 401(k) and IRA retirement plans and for employees to control their contributions. The biggest benefit of online payroll services is that all the work – payroll calculations, payroll tax payments, end of the year tax forms — is completed for you. The only task you need to complete is the hours worked by each employee in each payroll period.
Before you decide on a payroll service, get some referrals from colleagues in businesses like yours and check on them. Look for reviews and testimonials. You want to see that they provide strong customer service and are available when you need them, not just on the days that your payroll is due. Get a contact person to work with who is knowledgeable who knows what your tax needs are and understands your business.
You need to know how the payroll is delivered to you by courier or mail, what the charges are, what happens in the event of mistakes, and are the checks printed. You will need to know the company’s billing structure and how much you will be billed. You will pay more when the government filings are due, and if you are charged for adding on new employees. You will need to compare charges and services rendered by a few payroll services to choose the right one for your business.