Every company that hires employees has a payroll system in place to pay its employees. Today, many businesses prefer to deal with a payroll service to make the process easier and more comfortable than managing it on their own or outsourcing the task to a bookkeeper. This guide will teach you everything you need to know about these services and how to select one.
What Is a Payroll Service?
A payroll firm is a company that provides services such as payroll processing, payroll tax filings, year-end taxes, and more. A full-service payroll provider handles your employees’ deposits and withdrawals, withholding and pay garnishments, and new-hire reporting. When you use a payroll system, you can efficiently pay any type of employee, including full-time, part-time, and freelancers. The payroll service provider allows you to concentrate on your business while they handle your payroll.
Types of Payroll Options
In-house: Hiring an in-house accounting staff to handle your payroll is an excellent alternative if you have a large company with numerous employees. Your accounting team will understand the intricacies of your business and its culture, allowing them to scale and adapt in conjunction with it. They are also quickly available in the event of an emergency or a last-minute alteration.
Bookkeepers: A bookkeeper is someone who prepares your accounts and manages your finances. This is a solution for small firms with few employees. Your bookkeeper may be in-house staff, or your company may be one of the bookkeeper’s many clients.
Online payroll: If you opt to do your own payroll, there are various online payroll services accessible. Because you will be personally entering all of the data and processing the payroll, this method will require more time from you, but it will save you money.
Software: Payroll software, like an online payroll service, requires time to input all of the necessary data. There are automatic solutions available through software that save you time over manually processing everything through an internet service. However, the software must be maintained and double-checked to ensure there are no problems.
What Are the Benefits of Online Payroll Services?
The cloud is used to host online payroll services. You do not need to install or maintain any software, and you may manage and execute your payroll from anywhere. This type of scheme can be used to pay full-time, part-time, contract, and freelance staff.
Online payroll usually covers a number of services:
Processing of payroll: Payroll software calculates how much employees should be paid each pay cycle automatically. The systems take into account wage rates, shift differentials, overtime, holiday pay, taxes, and Social Security and benefit deductions. Direct deposit, prepaid debit cards, and paper checks are used to pay employees.
Filing and paying payroll taxes: These providers can withhold employee taxes, file quarterly payroll tax reports, and pay your employees’ tax withholdings to the appropriate local, state, and federal agencies. They also provide W-2 and 1099 forms to employees at the end of each year. Some providers have an error-free guarantee; if an error is made, these payroll businesses will remedy the issue and reimburse any fines or interest you pay.
New-hire reporting: Many payroll firms will notify the government about your new hires on your behalf.
Integrations: Accounting software, time and attendance systems, and human resources software are just a few of the payroll-related tools that can be integrated with online payroll services.
Paid-Time-Off management: Many payroll services track how many vacation and sick days your employees have earned and spent, allowing you to manage paid time off more effectively. Some payroll software even makes requesting and receiving time off easier.
Employee self-service: Employees may usually examine their payslips, PTO balances, and year-end tax forms through the online system.
Mobile access: Many payroll systems have mobile apps or mobile-friendly websites that you may use to manage and conduct payroll from your smartphone or tablet.
Payroll reports: Wage and labor reports from your provider can give you a more in-depth understanding of how your company operates.
The most significant advantage of using online payroll services is that they handle all of the related tasks for you, such as payroll computations, payroll tax payments, year-end tax forms, and so on. Payroll may often be processed in minutes using these methods.
What Is the Cost of Online Payroll Services?
Payroll services vary in price, but most have a basic pricing structure: a flat base fee each month or per billing cycle. Per-pay-period services charge you every time you run payroll, but per-month providers allow you to run payroll as many times as you like each month.
Some service providers provide a variety of pricing options for various levels of service. A basic plan, for example, may merely offer payroll processing, whereas more complex and pricey plans may additionally include payroll tax payment and the printing of W-2 forms for your employees.
Some services offer additional fees for using direct deposit, completing year-end tax services, and setting up the system.
What to Look for in a Payroll Service
Not every payroll service provider is the same. Here are a few things to look for in a payroll service provider for small businesses:
Features: Aside from payroll processing and the fulfillment of all tax responsibilities, you should check whether the payroll service provides offers multiple payment choices, such as direct deposit, paper checks, and prepaid debit cards. You should also check to see if it provides numerous wage rates, garnishment payments, PTO management, workers’ compensation administration, unemployment insurance, and full payroll reports.
Ease of use: The payroll service should not be overly complicated. It should have a simple interface that lets you quickly process payroll and add people to the system.
Price: Businesses, understandably, want to select a service that they can afford. In addition to the price, you must consider whether or not a contract is required. Many services are available on a month-to-month basis with no long-term commitments, while others demand annual commitments. It’s also critical to consider if you’ll pay by the month or by the pay period. The price structure you adopt could have significant financial effects depending on how frequently you run payroll.
Reputation: Find a payroll service provider with a proven track record and positive internet ratings; you’ll feel more at ease knowing they’ve dealt with similar payroll situations before.
Integrations: You want a payroll solution that integrates with the applications you already use, like time and attendance systems and accounting software, whether the interfaces are built-in or can be made via an API.
Support: Find a payroll service provider that can assist you whenever you need it. You should inquire about having a dedicated support professional who will be your primary point of contact.
Outages: Because online payroll services are cloud-based, businesses rely on the payroll provider to keep the system operational. Inquire with the supplier about the number of outages and how frequently the system is down for maintenance.
Employee self-service: Employees should be able to access their digital payslips and year-end tax forms on their own through your payroll service.
Added services: Other services, such as human resources, benefits administration, and retirement plan administration, are available from some payroll providers and can be added to your plan.
Payroll management is not a task that is fun for most businesses. If a company does not have the internal resources to put such a system in place, it can often mean looking outside the organization for help in processing payroll. The decision of going with an outside payroll service provider, though, is something that also cannot be taken lightly. You will want to consider the factors mentioned above when choosing a provider to go with as you manage your payroll activity.
Savvy Financials offers online payroll services for small businesses. Our technology allows you to pay your employees directly and track their work hours easily through a simple interface that can be accessed from any internet-enabled computer. We know that time is money, so we help you make the most of both. Contact us today to learn more about our services.