It is usually recommended that a professional accountant or agency takes care of processing payrolls. Many small business owners can get away with processing their own payroll due to reduced workload and digital solutions. Processing your own business’s payroll can help you save some money and give you financial experience that can, later on, develop more. The bigger your business is, the more complicated processing its payroll becomes, so it’s usually recommended not to do it on your own if you have a huge number of employees. We’ll be providing you with some easy ways to help you process your payroll while giving you an overview of the steps you should take to avoid any problems with the IRS.
Digital Solutions
Using digital solutions is the latest and easiest method for processing payroll for any small business, thanks to its sophisticated structure. The most important advantages include:
- Calendar: A lot of payroll software offers the ability to use an employee calendar to help you manage and track sick leaves, vacations, breaks, and many other details calculate what exactly they are entitled to.
- Budget-friendly: Software collects both the benefits of manual processing and using an accountant without the trouble that comes with them. Software is cheaper than hiring an accountant while being more efficient at processing the payroll.
- Updates: A lot of software solutions offer notifications about any new tax updates.
- Avoiding mistakes: Software solutions are known for their useful precautions that help you avoid making mistakes and notify you if you make one.
- Constant support: You’ll be able to contact customer support to help you with all the little details or problems you may run into.
When you’re using digital solutions to help you process your payroll, it becomes quite easy to cross check them with other departments and analyze them. A quick look at the payroll solution from Zenefits shows how digital payroll processing can be in sync with the HR ecosystems in matters like onboarding and automatic salary changes. It’s beneficial to go with services that provide you with the right guidance to help facilitate the process.
Manual Method
The old-school method for manually calculating your employees’ payroll is only suited for a company with only a few employees, as more than that would make it even more time-consuming. To start, you’ll want to create a spreadsheet that can be used to track the working hours of employees to be able to calculate taxes and paychecks. You’ll be responsible for calculating payroll taxes as well. If you have enough experience in tax law and finance, it’s a good choice that can save you some money. It’s worth mentioning that manually processing your small business’s payroll takes a lot of time and effort, not to mention that mistakes can often translate to IRS penalties.
Contract Accountant
If a full time or an in-house accountant is beyond your budget, it’s recommended to use an accountant on a contract-basis. Since big companies have a lot of employees working for them, a full-time accountant is necessary as it can get pretty hectic. A small business with a small number of employees would be able to get away with using a freelancer, or contract-based accountant to help you focus on the other necessities of a business. The best advantage you get with accountants is that they are experts when it comes to processing taxes and IRS regulations so you don’t end up getting penalized for a little mistake. You should know that contract accountants can still be costly and reduces the control you have over your business’s finances.
Why It’s Important
While it may sound intuitive at first to think that you could just pay your employees once a job or project completes, but many complexities are in place to reduce the risk of being sued and improving the operations. Payroll processing isn’t simply paying your employees and going on into the sunset, but it’s rather a system that is very well-documented to help you and the government track who works in your company and the amount of money you’re spending.
The digital solutions provided by today’s technology can help you process your business’s payroll without forcing you to learn about tax law and regulations from the beginning. While it’s okay to do it manually if you really know what you’re doing, but many owners would prefer saving that amount of time to help the business on its core targets. As long as you weigh the pros and cons carefully, you should be able to find the most convenient method for you.
