Payroll is never exactly an easy topic for small business owners. There is the fun of employee versus independent contactor; all the necessary forms; the overall costs as well as the actually managing of the employees.
I am discussing with a client the best way for him to handle his payroll. He is launching an office in January and is planning on five employees. He is looking for the most efficient and cheapest alternative. I have given him a number of options to think about.
There is the payroll service route. They will handle the entire process including the taxes and quarterly and annual filings for a price. He would need to enter the hours of the employees and make sure the paperwork was filled out.
Then there is the self service method, such as the Intuit method. For an annual fee and direct deposit costs. But all of the entry and processing would have to be done by him or a representative in a timely fashion.
My favorite option is to have it done by my office as part of their monthly retainer. Then we process everything after making sure we have the hours.
A future option for small business in an effort to make the process easier will be by using a smart phone, A number of providers are rolling out free apps that will automatically calculate payrolls, file taxes and deposit paychecks directly into employees’ bank accounts. Plus the software updates when tax rules change. My concerns over this are the security of the phones and data that they hold. You are talking of having access to social security numbers, addresses, and banking information.
But the biggest issue with small businesses and them doing their own payroll is that it is estimated that a third of small firms are hit with penalties for payroll mistakes every year, incurring fines averaging $848. It is also estimated that nearly a third of small businesses do their payrolls manually.