What is Payroll?
Payroll is the process by which employers pay an employee for the work they have done. Any business with employees should have a payroll established. Although, payroll seems like a mundane task, it involves many aspects including, withholding taxes from each paycheck and making sure accurate funds are paid to the correct government agency.
Payroll duties can create a huge burden and unwanted stress for small business owners. A missed deadline or incorrect filing of taxes can result in fines or jail time. To avoid these issues, small and middle-sized businesses can benefit from using payroll systems. A payroll system is software which organizes all the tasks of employee payment and the filing of employee taxes. These tasks can include keeping tracking of hours, calculating wages, withholding taxes and deductions, printing and delivering checks and paying employment taxes to the government.
Payroll software often requires very little input from the employer. The employer needs to input employee wage information and hours—then the software calculates the information including withholdings automatically. Most payroll software is automatically updated every time a tax law changes and will remind employers when to file various tax forms.
Choosing a Payroll System
Choosing a payroll system that best fits your business is essential. It may be difficult to decide which system to choose, but there are some factors to keep in mind when deciding. First, analyze the size of your business and how much of your budget you are willing to spend on payroll processing.
While it is possible for smaller businesses to handle payroll duties in-house through a manual process, a lot of time can be wasted attempting to calculate everything correctly. One miscalculation and the business owner could find themselves in legal or financial trouble. Mid-sized companies with up to 100 employees benefit greatly by investing in a payroll system.
Things to Consider when Choosing a System
When choosing a payroll system, you’ll want to look for security. Is the software password protected? Having a password protected software ensures there is no tampering of information. Next, is the software compatible and flexible? It is important to have payroll software that functions well with your other business systems and will grow with your business.
Another factor to consider is systems credibility. Make sure the software is made by a well-known brand. Lastly, you’ll want a payroll system which will allow the employer to still have control and the option of viewing reports and historical information. Once you choose your payroll system it is up to you how much control you want over it.