Best Payroll Practices for Small Businesses

INTRODUCTION

So, when you are starting small, managing your money efficiently is what keeps running at the back of your mind, and rightly so. However, no matter how small or big as a business you are, size is not a deciding factor when it comes to compensating your employees. Keeping your workforce revitalized throughout their work hours and beyond is the key to keep your business flourishing with no end, and an accurate on-time pay plays a major role in doing so.

Initially, handling payroll might seem to be an easy business for a handful of your employees, but when days pass by, carrying out the same repetitive tasks might leave you pissed. Staying alert to the erratic compliance norms and revamping your pay policies again from the root is a challenging job accompanied by monotony.

Therefore, manual handling of payroll process stands as a major obstacle between you and your business growth, as you could hardly take some time out to attend to the other crucial affairs, vital to keep your company running.

Let’s assume you opted for managing your payroll processes by yourself in the beginning. But a few months later after getting sick and tired of managing payroll yourself, you decided to move on to hiring professionals to perform the payroll processing for you. The whole idea begins with adding up to your expenses. How? You are hiring professionals, conducting training programmes, setting up a dedicated workspace, and so on. Having conducted the entire process, you have already invested a big chunk of your invaluable time and money. Even after this you still can’t guarantee insurance against any flaws in the process because manual handling comes with inevitable human errors and no matter how unintentional it is, ultimately you have to bear the repercussions all by yourself and the blow might be a massive one.

The other payroll processing options that you are left with are a Payroll Software or a Payroll Outsourcing Provider. But before moving further, let me explain in brief, what payroll software and payroll outsourcing are.

Payroll software is an integrated multifunctional system which can perform automatic calculations by deducting withholdings, such as taxes, insurance and other retirement contributions for submissions to the government bodies. It is also capable of processing direct paycheck deposits, storing employee data, retrieving data for tax filings, generating tax forms, etc.

It can also be configured to print checks for employees, who are not enrolled for direct deposits. A lot of payroll software also provide Employee-Self-Service facilities, such that an employee can view and make any necessary changes in their mobiles or laptops.

On the other hand, Payroll Outsourcing is a process of subscribing to a third-party payroll service provider for acquiring assistance related to payroll operations. The payroll service provider is reckoned to be an expert in this domain reassuring finest of assistance throughout the subscription period.

The payroll services that they offer are maintaining the employee database, deriving the net pay by deducting the gross deductions from the gross income, distributing salaries, generating pay slips and producing detailed reports to the concerned authorities for analysis. You can also tailor these services.

Listing down the comparisons between both the payroll software and payroll outsourcing options.

Payroll Software Perks:

  • You can customise the software as per your requirements by yourself and few of your authorized personnel, thereby cutting down on the need to wait for turn-around time.
  • Your confidential data is stored in the cloud safely, without any third-party intervention, such that only the most crucial people with access can view them.
  • You are offered with mobile capabilities, which provides easy access from anywhere in the world.
  • You are offered with additional benefits such as troubleshooting, payroll reports, etc.

Payroll Software Drawbacks:

  • You will need to invest in training programmes for employees to run this payroll software efficiently.
  • You will be responsible for any mistakes and fix them by yourself.
  • You must ensure if the cost your paying for the software will be worth the service you access.
  • You have to carry out your year-end tax filings of your own, which is a complicated job and demands a lot of strategies.

Payroll Outsourcing Perks:

  • You will be offered with services using the latest technologies.
  • You can be insured against any kinds of fallout in payroll processing.
  • You can save and invest much of your valuable time in your critical business functions, which is a key ingredient for a small business.
  • You can gain an edge over your competitors.
  • You need not worry about tax-filings, as the third-party service providers provide you with enhanced assistance from scratch.
  • You are assured of high data security.

Payroll Outsourcing Drawbacks:

  • You will have to invest a good sum of money initially, but when comparing with the other alternatives and when considering from the angle of a long-term perspective, it can be a overweigh the cost factor.

As there are two faces of a coin, likewise every alternative comes with its own perks and drawbacks. But, after proper research and study, choosing the best channel to perform the payroll operations is a pressing need.


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