The word “payroll” can be both a loved asset and a cringe-worthy subject to business owners everywhere. No matter how small or large your business is, payroll is a crucial operational function. It must be efficient, timely, and accurate (much like the payroll services we provide here at PayTech!).
Payroll is simply paying your employees for hours worked or services provided. It is an agreed-upon contract of a set hourly wage or salary per worker. This contract initiates on an employee’s hire date. It also takes into account any merit increases, bonuses, or any other contingencies affecting the base rate.
For someone who is not as affluent in payroll tax laws and ordinances, it can be an overwhelming task. Payroll has its own set of rules and caveats that make it more complicated. For example, deductions need to be taken from gross pay, such as federal and state withholding taxes and benefits payments.
Each new hire is required to fill out a W-4 or W-9 during employee onboarding. This federal form incites their burden to report their wages to the federal government. The state may also have its own wage reporting documents.
Employees select on these forms how much they plan to pay in taxes to meet their taxable burden. The HR department withholds this amount per paycheck, which is reported on each employee’s W-2 during the tax filing season.
The U.S. Internal Revenue Service (IRS) then measures up the annual wages to the employee’s income tax bracket to ensure the tax obligation was met. If employees underpaid their tax burden for the previous calendar year, they will owe taxes. This could result in wage garnishment, which becomes another task for the HR department.
Business owners and their HR departments have a great duty to comply with the Fair Labor Standards Act (FLSA). The FLSA was founded by the U.S. Department of Labor. This act essentially is the checks and balances for businesses. Its main focus is how fairly workers’ wages are with topics like these:
A business owner can be strong in all areas of operation except payroll and other accounting functions. In many cases, a small business may not have a dedicated HR manager or department. The risk of high turnover or being audited as a business exponentially grows when leadership struggles with payroll and compliance.
Thankfully, there are solutions available to offset this critical HR task. The payroll solutions market targets HR departments of small and medium businesses up to large corporations. They can help businesses prosper and thereby further the economy.
Payroll SAAS options have experienced rapid growth in the past decade. The global HR and payroll services and software market was once valued at $17.2 billion (U.S.) in 2016. This figure is expected to balloon to $41.6 billion (U.S.) by 2026.
This growth came about when small businesses and enterprises began welcoming help running their companies in the accounting and HR departments. There are more compliance and payroll tax laws in effect today that confuse many. When a provider can step in and be an expert on behalf of business owners and managers, processes run much more smoothly.
It’s very common to have data entry errors resulting in incorrect paycheck distribution. This could be anything like these:
Other common errors that can occur are with the direct deposit set up during employee onboarding.
On a greater scale, though, payroll processing can face major issues for a larger workforce if recordkeeping isn’t safe, efficient, or accurate. A business could altogether be using the wrong payroll program. Another complication is system incompatibility with the timeclock or employee self-service (ESS) modules.
FLSA mandates apply to federal, state and local entities. If any formal complaints are lodged against a business, those entities reserve the right to inspect the company for any areas of compliance issues. Areas of concern include:
Working with a payroll solutions provider is the fastest way small businesses can save time. It also helps ensure they meet FLSA compliance. This may be having an outside company manage the payroll processing or using their SAAS product.
When employees are unfairly paid for their time worked, and their direct company contributions, turnover and absenteeism increase. The Society of Human Resource Management (SHRM) shared the results of a study that shows the direct correlation of absenteeism affecting businesses. It summarizes up to this point:
“Supervisors spent an average of 4.2 hours a week — or 5.3 weeks a year — dealing with absences, including finding replacements, adjusting workflow and providing training….”
When a business has a dedicated HR or payroll manager, the cost of goods and services is less expensive, but the risk is greater. If the HR manager gets overwhelmed or is improperly trained, mistakes will happen. Using a payroll service provider or solutions program helps decrease the likelihood of mistakes and internal burnout.
Setting up payroll for a small business seems like a simple A, B, C task, but there are many moving parts involved. The process becomes more simplified with the help of a payroll solutions provider. With tutorials and dedicated customer service agents at your fingertips, the setup and ongoing management becomes more feasible.
ADP and Paychex are no doubt among the most known names in the payroll market. Many other HR solutions providers help with more than payroll setup and ongoing maintenance. Zenefits, Quickbooks, and Paytech are among the rising names in the business.
It’s becoming more common that small businesses outsource payroll tasks. Unparalleled security, a drastic reduction in data entry errors, and around-the-clock technical support are the leading benefits of outsourcing payroll. To complete payroll functions, today’s software uses the best of artificial intelligence and autonomy for efficiency and accuracy.
A payroll service provider can help ensure proper record keeping for a business’ workforce. Many archive time logs in a secure server or cloud for protection and easy retrieval. Others offer electronic alerts for managers to be aware of employees nearing or are in overtime ranges and more.
Payroll software does more than ensure your employees are paid accurately and on time. It helps define your overhead costs and looks for tax credits and expense recoveries. Some even allow time management tracking, 401K and insurance offerings, and E-Verify confirmation for hiring new employees.
The payroll software market is congested with many providers, options and pricing tiers. You need to find the one that’s best for your business model.
The key thing you should look for from a payroll provider is ease of scalability as your business and workforce grows. Other important points are security features and compatibility with time management and accounting tools.
You know your business best and can assess when trusting outside person or tool is the right step for you. A leading benefit to working with a payroll solutions provider, like Paytech, is having a dedicated account manager. This point of contact can help you navigate any areas of concern. This point of contact can also provide tips on how to use the latest technology for even quicker results. A tool or program alone can’t offer you this.
It’s important to understand that it is impossible to have a one-size cost blanket for payroll services. Every business has different needs from a payroll service provider. Questions to consider that may affect your one-time and recurring costs:
A small business is most often a business with a workforce of 1-49 employees. In the Paytech pricing packages, direct deposit is included in the custom solution at $95 per month. Other payroll companies for small businesses have different pricing tiers and are subject to other contingencies that vary.
Payroll can be made easier by outsourcing HR tasks. Many are relieved when using a payroll program that autonomously runs and collects the data necessary to operate.
The use of ESS modules helps pare down the amount of paper that is necessary. No more wasted paper on time off requests, pay stub copies that often get shredded, and other items. And, of course, paper versions are still available by download whenever needed.
When a small business invests in payroll software and completes the setup, the processes become quicker and more efficient. The software pays for itself as time progresses. The time savings alone is a huge benefit. Some programs even signal error warnings that can be remedied before paycheck distribution.
Complete accounting and HR support options are available when looking at payroll for small businesses. Paytech offers this starting at $51 per month, and it is included in the same package with direct deposit above. Other companies have different pricing packages based on workforce size, the technology needed, and more.
Businesses thrive off of payroll. Without it, businesses would crumble. Take advantage of the latest technology available with Paytech’s payroll options for small businesses.
Paytech is a local provider that understands the needs of business owners and HR departments. We assign you a dedicated account manager to help you navigate the setup process. That manager is available for ongoing maintenance and sharing our our latest updates and modules. Book a meeting time with our experts today at 602.892.4796 or firstname.lastname@example.org.