Payroll Services for Small Business

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Small Business Payroll Services

One cost effective way for your business to take advantage of the benefits of outsourcing while ensuring that an extremely crucial administrative duty is expertly handled is by hiring one of the many firms that provide payroll services for small business. If you have employees or if you formed your business as a corporation and treat yourself as an employee, you know how important it is to get the payroll done accurately and on time. Payroll accounting is extremely complex and despite its importance, doing the payroll tends to be one of the things that small business owners who do it themselves enjoy the least. Even if you have a person or persons on your staff that handle the payroll for your business, you still might want to consider hiring an outside payroll service as it will allow your staff to spend more time on tasks that help improve your bottom line.

Reasons to Use a Payroll Service for Your Small Business

• Simplify Your Life as a Business Owner - The time sensitivity, complexity, and amount of work that needs to be done around issuing paychecks can be overwhelming and stressful. Small business payroll services remove the burden and make keeping your books significantly easier. You and your staff can focus on your core business and concentrate on doing what you do best.
• Avoid Payroll Tax Issues - Payroll prep is one of the more complicated areas of small business accounting as there are numerous ways to make mistakes. In addition to cutting the paychecks and making the direct deposits, there are also IRS and state payroll tax requirements which are strict and time sensitive. Any mistake you make or deadlines you miss when it comes to payroll taxes often expose your business to fines and penalties. A good payroll service will calculate the proper amount due and help you get your tax obligations paid on time. At year end, you can also rely on your payroll service to produce W-2 forms as well as state and federal transmittal statements.
• Confidentiality - Having one or more of your team members doing your payroll grants them access to information you might wish to keep secret, namely how much each of your employees is being paid. While it is highly unprofessional and you would hope that the employee you entrust to do your payroll accounting would not leak information to your staff, it can happen. Your bookkeeper may take a look at what you are paying everyone else and demand a pay increase for himself or herself. Or if word gets out, you may be faced with anything from having to grant raises to full scale mutiny. As a result, you could wind up having to deal with unhappy employees and spend more on employee salaries than you would have if you had just outsourced your payroll.

Types of Payroll Services for Small Business

• National Payroll Service Providers - ADP and Paychex are the firms you have probably heard of before. Intuit, maker of the QuickBooks accounting software program, also offer payroll services for small business. The advantage of using one of the well known national firms is that these companies are well established and have demonstrated expertise in handling payrolls of all sizes across a variety of industries.
• Banks - If you have a small business bank account, and as a business owner you should, check with your bank to see if they also offer payroll services. Bank of America for example offers payroll in addition to other services with their small business checking accounts. The downside of having your bank do your payroll is that banks typically withhold the amount of any taxes due from your account as soon as the payroll is done even though your tax payment is not yet due. This means that you cannot use the money allocated for payroll tax.
• Local Firms - If you prefer doing business face to face or with a company closer to home you may decide to choose a local payroll firm, bookkeeper or accounting practice. The big firms generally have regional offices, but there may not be one near enough to your business for your liking. If cost is a concern, definitely look locally as the national outfits do not have a lot of flexibility built into their pricing plans so you may be able to save on costs by staying local. You may also be interested in other services like tax advice, help with your resource planning, or other services that dedicated payroll companies do not provide.

Cost of Small Business Payroll Services

Payroll services can be cost effective regardless of the size of your small business or the number of employees you have. Cost effective does not necessarily mean cheap, however. You are probably looking at costs starting anywhere from $1,000 to $2,000 a year. Get quotes from multiple services and compare. Avoid firms that charge a setup fee or see if you can negotiate that out. Once you gather all your quotes, you might find that $99 a month or so is reasonable when you consider the time it takes you to prepare your payroll and your level of understanding of tax requirements.

Payroll Services for Small Business

Given how time consuming and complex payroll preparation can be, for many businesses it makes sense to outsource to a company that provides payroll services for small business. Offering benefits like tuition reimbursement, retirement plans, various types of insurance, and other perks adds to the difficulty of doing the payroll yourself. Doing it yourself or in house also means contending with federal and state taxes, keeping up with regulations, plus the potential fines and penalties for late filing or errors. The more complicated your situation is, the more likely hiring a small business payroll service is a good idea. The time you save could be spent on other areas of your business that drive profits.