How Do I Process Payroll For My Small Business?
Many small businesses opt to do their payroll by having a designated employee (or you, the business owner) process it at the end of each pay period. When you’re just starting, it may be necessary to save on costs and help you to see firsthand what’s happening with your finances. However, as your company expands and you hire more employees, your payroll process might slow down, become outdated, or be too time-consuming.
Payroll discrepancies could cost you or your employees down the road if they go unnoticed. Many payroll details are determined case-by-case, based on the employee’s tax filing status and how many people live in their home. Some additional aspects of accurately maintaining payroll are listed below, so you can know what to expect if you decide on a DIY method.
Did you calculate overtime?
Miscalculating overtime is one of the most common mistakes a new company, new to payroll, could make. If your employee exceeds the 40-hour federal working limit, you may need to add their extra hours at a higher pay rate (typically 1.5 or 2 times the regular hourly pay). Documenting those extra hours is a great idea, even if they are exempt from overtime. It covers your tracks and can provide insight if you need to refer to it later.
Are you making the correct deductions?
When someone is officially on your payroll, you should document their employment and tax filing details. Gathering this info will help you calculate how much you should subtract from the employee’s pay. First, you will need to make Pre-tax deductions, meaning that funds are removed from the gross income before making other deductions. Then, you will deduct post-tax deductions, which are pretty straightforward.
Are you making scheduled payments?
After calculating the gross pay and taxes you are supposed to withhold, you will need to send the collected amounts to the federal and state agencies responsible for managing those payments. You will send the payments to these agencies based on the arrangement you set up with them.
These are the more common missed steps, but not all of them. Payroll is not something to take lightly. If poorly executed, it can cause frustration for you and your employees while trying to figure out what went wrong. If severe mistakes are made, you could even face penalties from the IRS or your state’s Department of Revenue. However, there is a way to avoid the hassle of doing your payroll and simplifying how you handle your business finances.
If you’ve outgrown your old payroll process or want to do it the right way from the beginning, reach out to a company specializing in payroll processing. With the help of an experienced processor, you can eliminate stress and wasted time and get back to what you do best- running your business.
What does a payroll company do?
Payroll processors are responsible for handling complicated equations, deducting taxes, remitting payments to government agencies, and recording your payroll expenses. Payroll services come can be offered in several different ways, like:
You can hire someone to work within your company and process only your payroll. Larger businesses with more than 15 employees are usually the first to get on board with this option. Hiring an in-house processor saves the confusion of having assistants help you or doing it alone. You will need to provide them with a place to work (preferably without distraction). It may also benefit you to provide them with software to make the task easier, instead of relying on spreadsheets and manually logging account info. The drawback to having an in-house process is that without safeguards, giving access to financial accounts can open your company up to embezzlement or fraud.
Online Payroll Services
You can pay a service to collect the information you submit for payroll automatically, and their software will handle the processing. You can connect your bank accounts and spend less time tracking expenses and payouts. The pro is that you can still process payroll independently but without wasting time. Having the right tools is usually half the struggle. The downside is the lack of personalized customer support. Not all businesses are the same and having a customizable experience makes all the difference in your chosen service. Online payroll services can also be very costly and add additional charges for each little thing.
Trusted Local Services
Most cities have at least one company that offers payroll services, like RWB Tax Services in Villa Rica, GA. At a business like this, you can call or visit to get updates on your financial progress, and there is always a person there to help if you have questions or concerns. So you get all the benefits of automatic software, plus an actual person to help you with questions or concerns. They can also help you with your bookkeeping, budgeting, tax preparation, and more.
Payroll services can be helpful in different ways. They all have features that make payroll processing a breeze for their client. However, most of your decision will depend on the costs and the benefits. In-house payroll employees can be costly. You need a place to set up a workstation, and you will have the additional costs of supplies and software. Then, you have employment tax and insurance to consider. Online payroll is affordable, but you never know who exactly can view your private information. Your best bet is to hire a local, dedicated company to process your payroll. They can provide your business with more security and are more willing to accept liability if mistakes are made.
Is using a payroll company worth it?
If you have the means, hiring a third party to handle your payroll can provide peace of mind, among many other benefits. You should consider many factors when deciding if outsourcing is the right choice. If math is not your strong suit or you don’t have the time to train on regulations, reach out to someone with professional experience.
Take Back the Time It Costs You
Processing payroll is a must for every employer, but it can be time-consuming and prevent you from being where you are needed. If your process costs you time and money, look for the best payroll service to fit your needs. You’ll be able to save time by letting someone else take on that task! Now, with more time on your hands, you can focus on the success of your business.
Maintain Payroll Accuracy
Many business owners find it best to have a trained eye on the payroll to avoid penalties and missed payments. Outsourcing also eliminates the stress of remembering changes in laws and regulations that dictate payroll requirements. The company you hire is expected to remain current on all changes to federal and state tax rates, insurance rates, and employment regulations.
Outsourcing Should Be Convenient
Not only will you save time and have better business practices, but you’ll also notice how convenient this type of service can be, not just for your business. Your employees can also benefit from the convenience your payroll service offers. In addition, the system you choose should provide you with ease of use, features and integrations that match your needs, and a price tag that doesn’t break the bank.
What should I look for in a payroll company?
Choosing a payroll company is an investment of your time and money. So how can you be sure you’ve made the right choice? It’s simple! You ask questions and be upfront about your goals and budget. Read ahead for a few things you may want to consider when shopping around for a payroll provider.
BENEFITS FOR YOUR BUSINESS
It would be best to look at customer reviews for the service you’re considering using. First, you want to ensure they have a history of keeping accurate records and providing excellent customer service for your sake and your employees. Then, use the experiences that other businesses have had to make an informed decision. Finally, go with the company that provides the best features for you and the highest possible customer satisfaction rating.
To make your payroll service more helpful, you could integrate it with your other applications to track time, onboard employees, and connect with other departments within your business. Whether a computer program or a human is processing your payroll, it would be ideal for them to have access to all they might need to optimize performance.
The convenience of having your payroll submitted and paid out hands-free will probably be the most substantial benefit you will get from your payroll provider. It’s a standard feature offered both by software companies and stand-alone businesses. In addition, it reduces the risk of funds being lost or stolen. Usually, once you get a direct deposit established, the account information remains the same unless you or an employee changes it.
The best payroll software and companies offer their clients options to secure information. For example, they can set permissions, initiate password protection, encrypt data, and even establish multi-factor authentication to ensure the appropriate people see your documents. However, current technology is so advanced that you may need several fail-safes to keep prying eyes away. Combining these features may serve you best, as it requires more effort to access your files. Providing adequate security measures benefits both you and your employees.
Now that you know more about the payroll process and what it requires for you to succeed, it should be easier to narrow down your choice of third-party payroll services. It’s normal to want affordability, security, or ease of use. If you find the right provider, you will likely get a bundle deal on all those features and more. Make sure your payroll service works for you before you commit to one. After all, they are there to help you succeed!
RWB Tax Services in Villa Rica, GA
If you think a local payroll processor is a perfect fit for your company, call us and set up a time to discuss how we can help you! We have been helping small businesses in Villa Rica since 2006. Our payroll experts stay up-to-date on the latest state and federal changes, and we work with you to make your payroll process as easy as possible!