As essential as it is to your business, managing payroll can quickly grow time-consuming. Regardless of how many workers you employ, keeping track of employee information is a weighty responsibility. Not to mention, the time spent managing payroll and keeping it IRS-compliant can easily consume a business’s budget.
While some small businesses still handle payroll manually, many more have come to see the long-term benefits of payroll services. Even if you are looking to keep payroll management in-house, a payroll management service can save your small business money. Here is how it works:
What is a Payroll Management Service?
Payroll management services keep track of all aspects of a business’s payroll. Specifically, they follow government rules regarding payroll standards, employee taxes and all labor laws. Additionally, an effective payroll management service can help small businesses keep track of essential employee information, including mailing addresses, how they receive their paychecks, when they receive their paychecks and any deductible fees from taxes or unions.
With only a small set of information to input — employers only need to file how much workers get paid and how many hours they’ve worked — there is little room for human error in the payroll management process. By keeping the system automated, payroll also runs on a much more consistent schedule and thus can boost company morale since payments are always on time. Aside from boosting employee morale, how can payroll management services help your small business save money?
Payroll services for small businesses consolidate all payroll work into a single program, making it easy for employers and employees alike to access their information. Through a payroll service, employers can keep records of wages and employee work hours, employee mailing addresses and tax information, overtime earnings and bonuses and the dates employees are paid.
For employees, the payroll management service works as a place to manage how they get paid (direct deposit or paycheck), access information regarding how many hours they’ve worked, manage and view their benefits package and access forms like the W-2 come tax season.
Avoid Unnecessary Fees
By using a payroll management service, employers can avoid discrepancies in the payroll process, both year-round and during tax season. With a decreased risk of human error, these systems can more accurately file employee paychecks and ensure that all employees are paid on time.
When employers invest in a payroll management system, they save time and valuable work hours needed to fix errors or hire specialists for only a few days out of the fiscal year. Additionally, most payroll services are completely paperless, which can both save companies money and decrease their carbon footprint.
Easier on Your Taxes
On top of preventing unnecessary fees, payroll management services make filing payroll taxes simple and fast. Roughly 1/3 of all small businesses spend forty hours each year filing taxes. Payroll management services can shorten this time by keeping all necessary tax information in one place. These services can also track employees’ fringe benefits, which are tax-deductible.
By tracking fringe benefits, employers have more incentive to use them when rewarding employees. Instead of giving employees frequent raises, which can be costly to the business since they are not tax-deductible and thus can lower wages overall, fringe benefits can keep employees’ salaries from dropping while still providing incentives and rewards for working.
Small business owners often find themselves attending to many different matters at a time. With payroll services for small businesses, these same business owners can spend more time on what they must do to keep thriving, while the payroll service ensures that all employees receive their hard-earned paychecks and that all tax obligations are met.