How determine right payroll software solution for
A common misconception is that only larger companies need to spend money for outside assistance in processing payroll. However, several small business owners are finding that implementing outsourced payroll services is surprisingly, cost effective. Unless you have accountancy experience you probably don't have the time or knowledge to keep up with your businesses payroll as it grows. As a business owner you have a three major options to handle your payroll, keep it in-house, payroll software, or outsource payroll.
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According to All Business, 58% of firms with less than 500 employees outsource their payroll. However, that number may be skewed because outsourcing payroll could range anywhere from simply printing checks to administering benefits. When determining what payroll solution your business needs, it often comes down to a matter of cost. Does it cost less to process payroll in-house than it does to outsource? The answers aren't always black and white but many small businesses are finding it feasible to outsource instead of paying in-house salaries.
One the biggest advantages of payroll software is the price savings. With an average cost of around $25-$75 a month you are able to handle most HR functions through a simple payroll software. Payroll software is perfect for small businesses with little complexity in their payment structure. For instance, if your business pays biweekly to every one of it's employees there is likely little complexity is involved with filings and check printing.
The software will compute payroll taxes and deductions automatically. A basic feature on most software programs is the processing of W-2 forms for each employee. Your company will benefit by remaining more compliant, and save time for HR professionals. However, the downside is that payroll software often requires a monthly fee and the software needs to be updated each year with new tax laws.
One of the major reasons that businesses decide to outsource payroll is to alleviate all the burdens associate with paying employees the correct way. If a business owner is not constantly up to date on the tax laws, and regulations they may be doing something illegal with their operations. Payroll companies are experts in compliance, and if for some reason a slip up happens many of them will assume liability.
The cost savings are substantial in comparison to a $40,000 a year HR professional. When comparing vendors, it can be tricky to understand hidden costs. Some will generate reports for you, and others wont. Understand the features you will be receiving from each vendor in relation to the price point.
Keep it In-House
With all the evidence supporting outsourcing, why would you keep it in house? According to All Business, "One reason is that large companies--generally, those with at least 10,000 employees--can afford the computer systems and staff to process payroll on their own. Their costs are spread over a large workforce, so per-check expenses are lower than for smaller firms."
Payroll can be one of the simplest procedures for a small business, but as complexity grows it sometimes turns unmanageable. In your attempts to understand the three different options you have with your payroll, remember that costs are the most important factor, but costs aren't always black and white. If you do decide to implement payroll software or outsource to a payroll company, be sure to get references and do your research.
Matt Krautstrunk is an expert writer on small business payroll services based in San Diego, California. Educated at The University of Illinois at Chicago, he has an eye for new and emerging trends in the business world. He writes extensively for an online resource that provides expert advice on purchasing and outsourcing decisions for small business owners and entrepreneurs such as document management software at Resource Nation. You can also find him writing for the Resource Nation Blog, touching on topics that range from small business technology to startup tips.