Here are the answers to some of the most commonly asked questions about payroll software and services:
What other benefits does payroll software provide?
There are several big benefits of using comprehensive online payroll solutions. One major plus is its efficiency. You don't have to hire someone to handle all of your payroll needs, because pretty much anyone can use the software. In most cases, all you need to do when running payroll each pay period is to enter the hours each employee worked and any bonuses or commissions they earned. The software does the rest for you: It calculates the pay amounts, withholds the proper deductions and automatically deposits the money into each employee's bank account.
Another benefit is that the payroll company takes care of the tax filings and payments for you. Most offer a tax guarantee, so if the payroll service makes a mistake when filing or paying your taxes, the company will fix the problem and pay any fines you incur.
What type of payroll service is right for my small business?
When you're choosing an online payroll service for your small business, there are several factors to consider. First and foremost, make sure it can handle all of your payroll and payroll tax needs. Can you run payroll as often as you like? Will the service make the deductions you need? Does it give your employees self-service access?
Also consider whether the payroll solution is easy to use. The online interface should be simple to understand, and it should allow you to run payroll in a matter of minutes.
Depending on your business's needs, you may benefit from selecting a payroll company that offers additional services, such as a time-and-attendance system and HR solutions.
What is unique about comprehensive payroll companies?
Comprehensive payroll companies do much more than prepare your business's payroll; they also handle your payroll tax needs, manage your employees' paid time off, report new hires to the proper agencies and offer workers' compensation insurance. Many comprehensive payroll solutions also offer HR management, benefits administration, time-and-attendance services, and 401(k) and college savings programs.
Why are payroll services important for small businesses?
Many small businesses don't have a dedicated HR team that knows the ins and outs of payroll. Instead, they rely on payroll companies to manage those responsibilities for them. They depend on these services to ensure that their employees are paid properly each month and that their payroll taxes are filed and paid appropriately.
Online payroll services give small businesses the peace of mind that, with just a few clicks, their employees will get the money they are owed and the proper payroll taxes will be withheld. This way, you don't have to worry about whether you filed the tax documents correctly and are paying the right amounts. In fact, online payroll services are so confident in handling these tasks that most services offer an error-free guarantee.
What is online payroll software?
Online payroll software and online payroll services are essentially the same thing. The payroll software is the cloud-based solution provided by the online payroll service provider; the software is what you technically interface with to run the payroll and add new employees to the system. Most online payroll software is easy to use and allows you to process payroll in minutes.
What's involved in implementing payroll software?
It doesn't take a lot to get payroll software up and running. Once you prove your business is legitimate, you can connect your business's bank account to the payroll service. Next, you enter your employees' information. In addition to providing the basics – including their names, addresses and Social Security numbers – you must input their pay rates and withholding information. Employees who want to be paid by direct deposit can enter that information in the system's online portal.
With that information, you can set your pay schedule and start processing payroll. Although it's easy to enter the details yourself, some payroll services handle it for you. Some charge an additional fee, while others include this service in their base fees.
Do payroll service providers offer mobile applications?
Yes, most payroll providers offer mobile apps for iOS and Android devices. Most of these apps allow administrators to run payroll, review past payroll runs and pay payroll taxes. Additionally, employees can use the mobile apps to review their paystubs, pay history and PTO accruals.
How long does payroll take to process?
This varies by payroll provider, but many payroll services complete the process within two days. This means that payroll administrators need to submit the final payroll numbers two days prior to payday.
Are there any free payroll software solutions?
There are several free payroll software solutions, including Payroll4Free.com, Wave Payroll and eSmart Paycheck. However, before choosing a free program, make sure it meets your company's basic needs. A free program is great for a business that's just starting out and helps manage tax calculations, wage garnishments, and Social Security and benefits deductions. However, when using a free service, you may have to sacrifice a few features, like customer service or security tools.
Should you use a payroll service or hire an accountant?
You should hire an accountant if you need help managing the collection and reporting aspects of payroll processing. Accountants can analyze your payroll and provide valuable guidance for businesses.
However, hiring an accountant can also be expensive. The average hourly fee for an accountant is $33.89 per hour, and certified public accountants charge an average of $160 to $275 per hour. Payroll services, by comparison, usually cost about $29 to $150 per month, with an additional fee of $2 to $12 per employee per month.
How can you save money on payroll?
To save money on payroll, consider outsourcing your payroll tasks. When managing it yourself, you may not do it correctly or on time – and mistakes or late processing can result in hefty penalties and fines. You may also consider looking for a free payroll service. However, most free payroll services don't offer all of the features and tools paid offerings do.
Using a time-and-attendance system is also a way to save money on your payroll, because it helps ensure you aren't paying employees for time they didn't work. When using a paper time sheet, employees can easily add a few minutes that they didn't actually work. Paying employees for a few minutes of time they didn't work might not seem like a big deal, but if this becomes a habit, the costs can really add up. A digital time-and-attendance system forces your team to input exact times, which keeps you from overpaying your staff.
What are unpaid payroll tax penalties?
Unpaid payroll tax penalties apply when an employer fails to pay the Internal Revenue Service the proper amount of payroll tax funds they owe. Failure to complete Form 941 or to provide proper documentation, like W-2s or 1099s, is also a problem. To avoid fines, you also need to make sure your deposits are on time.
What is an example of a payroll tax?
An example of payroll tax is the Federal Insurance Contributions Act (FICA) tax. This is a mandatory payroll deduction that employers pay to the IRS to cover Social Security retirement benefits and Medicare for employees.
What do you do with unclaimed paychecks?
If you are in possession of unclaimed paychecks, this does not mean you get to keep them. According to escheat laws, unclaimed paychecks become abandoned property and must be signed over to the appropriate state's treasury agency after a certain amount of time. This means that, if someone who works for you never claims their paycheck, you need to return it to the state where that person last worked. When submitting these documents to the appropriate agency, be sure to disclose all of the attempts you made to contact the employee about their check.
What is a pay period?
A pay period is the recurring length of time during which an employee's wages are calculated for payment. Pay periods can be weekly, biweekly, semimonthly or monthly. Learn more about the pros and cons of each schedule and issues to keep in mind so you choose the best schedule for your business.
What is the difference between payroll and salary?
Payroll is the system a company uses to record wages (and salaries), pay employees and track payments (and the payroll taxes you've paid). A salary, on the other hand, is a fixed, consistent payment, usually listed as an annual figure, that you give to specific employees. Learn more about whether it's best to pay your employees a salary or an hourly wage.