Payroll is one of the most burdensome administrative responsibilities for Small Business Owners. Most small businesses use one of these three methods to manage their payroll:
Payroll Services, Outsourced
Payroll Software, Hybrid between Internal and Outsourced
Putting your payroll in the hands of a professional payroll service or software can be a huge help to any business owner. You’ll save time and money and have the peace of mind knowing your payroll is in the hands of knowledgeable experts. But it’s critical to understand each option.
In this situation, you or someone on your staff uses an “off the shelf” payroll software. You set up your payroll in the system with key data and each pay period you activate payroll by entering hours worked and other key information depending on your payroll structure. The software automatically calculates each paycheck and generates employee pay stubs. You’re then responsible for printing checks or setting up direct deposit. It streamlines the process and allows you to maintain control.
A payroll service will take charge of the entire payroll process for you. This means the service runs your payroll online, does all of the tracking and logging, handles checks and direct deposits, and even files your federal, state and local payroll taxes. You don’t have to touch anything, and payroll is both out of sight.
Internal, Do-it-Yourself (DIY)
Although less popular, the good old fashioned do it yourself option still exists. If you’re reading this article, you already know what a pain payroll is. So, this option is probably not too appealing to you. What’s more, doing payroll on your own will usually end up costing you more in human error, wasted time and squandered resources. At the end of the day, it’s really not worth the hassle.
Payroll and Taxes
Filing your business taxes is a major endeavor and another important consideration in your payroll management choice. Each year the regulations change, and they're different from state to state and jurisdiction to jurisdiction. If you're not on top of things constantly, you can easily fall behind and face considerable fines for not filing your taxes properly. A modern online payroll service alleviates this issue by staying up to date with tax compliance laws and rules, so your business is always covered. A good payroll software also deals with end-of-year tax filing, W2s and other important tax forms.
So how do you decide the best option for you and your business?
Payroll software has many advantages for most businesses. But you need to weigh the factors that are most important to you. While it’s generally easy to learn payroll software systems, if you desire a totally hands-free option, a payroll service is better for you. It’s also a better option if you really want anaccount manager who will walk you through everything and be there to make changes for you.
On the other hand, if you’re looking for a more cost-efficient, flexible and secure solution, payroll software is your best bet. Software is a great way for companies to save money, keep their sensitive data in-house and have complete control over all payroll aspects.
Flexibility is also something to consider. If you like or need to make changes periodically, payroll software is easier to work with than outsourcing to a payroll service. Since everything is hosted on your system, you have complete access to your payroll 24/7. You can add new employees, delete terminated ones and update any information you need within seconds. Usually, outsourced payroll services require you to wait for open business hours, approval from your account manager and processing through the red tape. That could take days.
If you’re considering the payroll software option, you need to check on the software specs. A good application will afford you the most flexibility, convenience and efficiency. Here are features to look for to make your payroll effortless and fast:
Understanding the Costs – Payroll Software Pricing Models
Payroll software prices usually depend on the number of employees and level of features. There are three common payroll software pricing plans:
Per month, plus per employee monthly subscription plan – In a software-as-a-service (SaaS) pricing model, companies pay a monthly fee to access software through the cloud. The most common subscription plan forpayroll software is per month, plus per employee monthly fee.
Monthly subscription plans often come in several tiers with varying levels of features and services. The most expensive plans may include more technical support, HR advice and a dedicated accountant to review and file taxes.
This option is popular with companies of all sizes because the monthly fee is small and the per employee, per month fee is scalable. Companies also have flexibility in the features they choose to use.
Per month subscription plan – Some vendors offer a per month subscription plan that includes an unlimited number of employees. These solutions, however, generally have limited functionality and support.
The ideal customers for per month subscription plans are small businesses that don’t have extensive payroll needs. Larger companies will likely need more comprehensive features like tax filing and the ability to edit employee checks.
Perpetual license fee – Companies that deploy ERP, HRMS or accounting solutions on-premise can often purchase a perpetual license for a payroll module as well. This one-time fee is generally much higher than a monthly subscription price and doesn’t include upgrades.
With a perpetual license, however, companies have more opportunities to customize the software. In addition, the payroll module is better integrated with other modules for accounting, HR, and time and attendance.
Most payroll software companies do not provide pricing online. If you’d like to compare solutions, check out a review of over 25 payroll software vendors at: https://www.betterbuys.com/payroll/
Understanding the Costs – Payroll Service Pricing Models
Like the software vendors, few payroll service vendors share their pricing online. To help you understand the pricing variables, here are the items that impact cost for payroll service models:
- Total number of employees
- How often employees are paid
- Straight pay v incentive pay
- Where employees live
- Direct deposit v paper check
Knowing that you have options for how you manage your payroll is the first step in relieving yourself from a time-consuming burden.