Are You Hiring Employees for The First Time? Here’s How to Handle Payroll
There comes a time in every successful small business owner’s life when it’s time to hire employees and investigate payroll companies. While outsourcing various functions may work initially, full-time staff is often required for consistency, continuity, and quality control in many areas of your business.
But aspects of doing payroll can be time-consuming and products such as payroll software can help you get started. This brief article gives you some tips on how to handle payroll when that day comes in your small business.
Choose Between Do-it-Yourself or Payroll Service Providers
The first choice you need to make is whether to do payroll yourself in house or hire a payroll service. Many small business owners look at the lower cost of purchasing payroll software, but often they don’t calculate into the equation the cost of their time and the opportunity cost of taking time away from revenue-generating tasks. In addition, there is the risk of penalties and fees if you make mistakes in your payroll taxes.
A payroll service, on the other hand, does as little or as much as you’d like them to handle. They may just generate your checks, or provide full service including reports and payments for federal, state, and local taxes; W-2 and 1099 statements; as well as worker’s compensation payments. Payroll companies advertise that full payroll services are “worry-free,” and they actually do eliminate worry about doing payroll correctly.
Perhaps your number of employees is an easy way to determine which way to go. If you only have one or two employees, the cost of the service may exceed the benefit, no matter how attractively priced. However, as you get more and more employees, a full service payroll provider more than pays for itself.
Payroll Software Option
If you do go the in-house payroll route, try to choose a software package that will link to your accounting program. For example, if you use QuickBooks, look at the Intuit payroll offerings. Linking to your accounting program will mean less duplication of effort making accounting entries and also make it easier to send information to your tax financial professional.
Another consideration of using your own payroll software is that you must plan for payday. If you travel often, then you’ll have to arrange for paychecks to be generated in advance, which can be difficult with hourly employees whose hours fluctuate. A service allows you to call in hours, or enter them online, so if you are not in the office, checks will still be generated and delivered on time, making for happy employees!
Payroll companies with a big national reputation often have economies of scale that make them more economical than smaller firms. They also have been around for a while and usually have a big reputation at stake, so they are very willing to stand behind their products and services.
A small, local provider does have the advantage of giving you customized attention, especially if you know the owner personally. The disadvantage, of course, is that if there is a dispute, you may ruin a professional friendship.
Either option can meet the needs of a small business just hiring employees. Weighing the pros and cons carefully will mean the difference between increased stress in your life or peace of mind that your growing company is launched.
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