If you are a small business owner, you’ve likely considered hiring payroll services to take care of primary processing and advanced features. Small business owners spend an average of six hours monthly on payroll taxes and related tasks. If you’re like one in five that could be better spent focusing on your core business. Not to mention the savings. You’ll be protected against bad hires.
1. Set up payroll early
Setting up small business payroll is one of the most important tasks you can do for your small business. However, before you begin processing payroll, there are several aspects to consider, including federal and state labor laws, minimum wage laws, and employment tax rates.
The U.S. Department of Labor provides information and resources about federal employment laws to get a head start. However, depending on your state, you may need to learn the rules specific to your locality to set up your payroll process properly.
Payroll is often the most significant expense for a small business, leading to cash flow problems. To avoid this, setting up a payroll schedule as early as possible is essential. You’ll already have a Social Security number on hand for tax purposes. You’ll also need to know when and how often to pay your employees. You can find out your state’s payroll laws by visiting the government’s website.
2. Outsource payroll
Outsourcing payroll is an excellent way to save time and energy while maintaining compliance with the laws regarding payroll. A payroll provider is a virtual extension of your business, handling all the necessary payroll tasks like calculating employee payroll tax deductions, meeting government remittance deadlines, and preparing year-end payroll. The provider will also take employee inquiries, such as when employees should submit their hours worked.
While many small businesses struggle to handle payroll independently, outsourcing this function can help relieve some of the pressure on the owner and improve employee satisfaction.
While a payroll provider will charge a monthly fee, the cost depends on the number of employees you have, how often you need to process payroll, and which services you need. Most payroll services charge a per-payroll processing fee. However, some providers, work with start-up companies and offer low-cost, flexible payment options.
3. Save money
You can save money by utilizing payroll services if you have a small business. Most payroll services have monthly cost structures, with a base fee of $20 to $100 per month and additional costs for each employee or independent contractor. However, per-payroll prices can be as low as $10 to $100, including the cost of check stock, ink, and processing fees. Most services also offer a monthly or weekly pay period.
When considering which payroll service to use, compare their cost estimates. You should be able to determine the cost of each payroll run based on the number of employees and frequency of payroll. Check customer reviews and independent analyst reports to determine the cost of different payroll services.
Without due diligence, you could make a wrong decision and have to pay a lot more than necessary. Furthermore, you may switch to another payroll service, which is easy to do and can reduce interruption.
4. Protect against bad hires
The best way to protect your company from bad hires is to screen potential employees carefully. Unfortunately, this is not possible. However, you can hire payroll services that help with this process.
Avoid hiring rush workers. Sometimes the labor market can be tight, and hiring a candidate on the spur of the moment will cost you more money than hiring the right person in the first place. If you’re hiring someone without doing your homework, you’ll likely waste your time and money. A bad hire can put your business in a bind and result in a disastrous situation. Hiring the wrong person is always a risk.
5. Protect against costly mistakes
Many businesses fail to comply with government deadlines for processing payroll, which can have devastating effects on employees and the bottom line. The government collects payroll taxes on a pay-as-you-go basis.
The federal and state tax rates for payroll vary widely. Failing to comply with payroll deadlines can result in hefty fines – about $850 on average for small businesses. To avoid such issues, it’s best to outsource payroll processing to a small business service provider.
Whether you’re dealing with a single employee or a team, payroll management requires regular overhauls and updates. Updates help ensure compliance with federal, state, and local regulations. However, outdated software or processes can lead to costly mistakes and delays. The sooner you identify and correct errors, the better. In addition, you’ll benefit from regular training of your employees, preventing costly mistakes.