What is a Payroll Service Provider?
It is an independent company that provides an automated service that takes care of all the daily calculations and compliance with various regulations involved in running a business. It primarily pays your employees' wages, provides statements for payroll tax calculations, calculates annual taxes and ensures they are paid to the appropriate government department. It is usually an accurate, efficient system that pays out on time and covers all the different types of employees in your workforce including freelancers, part-time workers and those on short contracts. Providers usually offer a Cloud-based service so you won't need to purchase any additional software.
Choosing a Payroll Service Provider
Many owners of small businesses usually deal with their own paperwork when they first start up. It might seem easy at first but owners can quickly find the pressure of issuing pay checks on time, the volume of official paperwork and the tight deadlines of filing reports and payments to State and Federal departments are overwhelming. Some businesses have the financial resources to employee a professional bookkeeper or accountant to sort everything for them but many prefer the less expensive alternative of selecting a reliable payroll service provider.
Benefits of Using a Payroll Service
The main advantage is that the provider saves you valuable time. The complex payroll duties such as issuing 1099 and W-2 forms, filing payroll tax reports every quarter and ensuring any withholdings of your employees' pay tax are paid to the appropriate federal or state agencies. Payment deadlines are usually prioritized ensuring your business and tax obligations are met without you having to consider them. The provider allows you to grow your business while preventing you making costly errors with your paperwork. Some even include a guarantee of providing a service that is error-free which means they make any corrections on your behalf and take responsibility for any fines your business may incur as a result of their work.
Difference Between a Payroll Service and Payroll Software
Payroll software is a relatively inexpensive package you install and use on your business computer. It creates the basic outlines for the chores you still have to do such as filling in all the details of how much your employees are to be paid, how much time off they have and the tax responsibilities your company has towards the State and Federal governments. Payroll software is usually instantly accessible online and is often updated automatically to take care of any new regulations you need to comply with. However, some payroll software systems can be complicated to use and are sometimes designed for professional accountants rather than an amateur. A payroll service provider can be slightly more expensive but you gain the benefit of having all the complex payroll duties completed for you allowing you more time to concentrate on growing your business.
Features to Look for when Choosing a Payroll Service Provider
Some providers include the task of reporting to the government the details of any new-hires your business takes on. A feature such as the management of paid time off that tracks the attendance levels of your employees is beneficial. It charts the sick leave and vacations of each employee to calculate how many days they are entitled to have and their appropriate payments. Some payroll service providers enable your employees to access their pay accounts concerning PTO balances, pay stubs and annual tax forms. Many systems help businesses run smoothly by managing complicated calculations for shift differentials, scalable wage rates and overtime. By choosing a provider that includes Social Security deductions and payment methods such as paper checks, pre-paid debit cards and direct bank transfer you have all the requirements that a varied workforce could need. Detailed payroll labor reports or analytics can help you assess measures such as time and motion efficiency to improve your business. Smartphone compatibility is essential for accessing your business data at any time in any location.
Choosing a Payroll Service Provider
There is a wide range of costs from approximately $30 to $140 per month or there is often a customizable option to suit the exact size of your company. Basic packages can offer the flexibility of a monthly contract while others require an annual subscription. Some providers may offer a free trial or allow you to have the first month or two free of charge. Payroll providers that highlight a low rate of outages on their Cloud-based service will ensure you can always access your details. Customer support that runs 24/7 through flexible methods such as online chat or emails can provide reassurance. Providers that offer a service that integrates with your existing systems increases the efficiency of your business.