If cash is the life-blood of your business, then payroll is the “life-blood” of your employees. In order to keep your business running smoothly, you need to ensure that your employees are paid on time, without any errors. Late payrolls, errors in disbursement, and missed paychecks are enough to make any employee want to leave. This is why having a streamlined and error-free payroll process is critical for keeping business running smoothly.
There are three options for running payroll for small and medium sized businesses, each with its own set of benefits and disadvantages.
The DIY Method
Many small business owners prefer the “Do it yourself” method. When running a small business, and operating with limited resources, it’s not uncommon for the business owner to want to keep control by either doing everything themselves or having a staff person do payroll in-house. Running payroll manually involves:
- Cutting checks for each individual employee
- Withholding tax
- Managing time off, sick days, disability, and unemployment
- Preparing monthly, quarterly, and yearly reporting for the government
- Balancing the books after running each payroll
Handling these payroll duties in-house requires a lot of time. You have to tally the numbers, cut the checks, and balance the books. When something is transcribed or reported incorrectly – you’ll have to set aside more time to review the numbers to see what error was made and make the appropriate changes. While doing payroll in-house allows business owners to feel completely in control of their companies, it’s also one of the easiest tasks to outsource in order to save valuable time and energy for other areas of business operations.
Utilizing a Bookkeeping Software Solution
A bookkeeping system with an internal payroll solution (such as QuickBooks Pro with Enhanced Payroll) does streamline the process of running payroll. Calculations are done automatically within the system and once payroll is run, it is instantly reflected in the general ledger. While an automated bookkeeping system with payroll does help to simplify the process, there are still many things that need to be done manually. You’ll still need to pull the data in order to create the reports required by the government, and to issue W-2s at the end of the year. You’ll also still need to allocate enough time to manually enter information into the system and double check for errors.
Hiring an Outsourced Payroll Provider
Outsourcing your payroll immediately frees up time that business owners can use for other items on their ever-growing “to-do” lists. Instead of having to set aside a blocks of time each week, month, and quarter just for payroll, businesses can use this time to focus on improving day-to-day operations, expanding the business, and developing marketing and sales.
An additional benefit and timesaving’s created by outsourcing your payroll is that you won’t have to worry about reporting or making changes to payroll information. An outsourced payroll provider manages all of your reporting for you – so you won’t have to spend time calculating the correct withholding, filing government reports, and managing other payroll-related variables such as vacation/personal time, disability, and unemployment. If changes happen within your staff such as an address change, a new hire, or an employee leaving the company - all you have to do is email or call your payroll provider, give them the information, and everything else is taken care of for you.