Introduction

Notwithstanding the size of your business, you need an organized and functioning payroll system to streamline your operations and most importantly, avoid stiff penalties from IRS. A good payroll provider also ensures that your employees receive their dues on time. Yet, as research shows, 60% of businesses choose to handle their payroll needs in-house. On the surface of it, they might think they are saving. The truth of the matter is that this can be a stressful and also time-consuming process. It all starts with ensuring that you get the right provider. In this post, we walk you through the steps of choosing the right payroll service company. Continue reading to learn more. 

• Decide whether to pay your employees salaries or hourly wages

Paying employees monthly salaries is a lot easier to manage, and it’s why most employers prefer this option. Salaries avoid the stress of calculating the hours your employees have worked in the month. It also keeps everything consistent. 

But sometimes the only option you have may be to pay your workers hourly wages. If this is the case, you need to ensure that you have put in place a system that tracks the time they work and the compensation due. Ensure that your payroll provider can meet this request. 

• Pick the best payroll software that meets your business needs

We always advise our customers to give priority to a payroll service provider hosted on the cloud. The importance of this is that you are able to access all your payroll data in a single place whenever you need it.

The best payroll software also needs to take stress and guesswork out of payroll management. An example may be a service that lets customers integrate their payroll program into their system. This not only boosts collaboration but also betters communication in the payroll management process.

• Simplify your process

Managing payroll in-house comes with a lot of responsibilities. You will have to maintain a staff that works on it and this comes with budgetary implications. 

One guaranteed tip to simplify a payroll process is by investing in an HR task manager. Such tools let employers keep everything in a single place. This not only saves time but also money. 

• Choose a pay period for your employees

It is important to decide beforehand the pay period for your workers. You can choose to pay them monthly, weekly, or bi-weekly. This is important in ensuring that you are organized and that your payroll runs more smoothly.

• Classify your workers accordingly

Classification of your workers is another crucial tip that will go a long way toward ensuring your programs run smoothly. Whether you hire interns, full-time employees, or independent contractors, they will all have to be classified as your employees. The right classification will help you to avoid penalties from IRS. 

• Keep records of everything

Keeping your records in one central place is another vital tip guaranteed to simplify any payroll system. If anything, some federal and state laws require you to hold some records for a specific period before discarding them. For example, the law requires that you maintain proper records of tax deposits, tax forms, W4 and W2 forms, and vacation time. 

• Choose a program that takes into account raises and benefits.

The easiest way to give your workers salary raises is to give them extra benefits in the form of a reward.

This could be in the form of stipends for childcare, additional insurance, or even a new laptop. These are just some of the tax-free methods of giving your employees more benefits. They also simplify tax paperwork.

• Find out if you need employer ID numbers.

To process taxes, it is a requirement in some states to get an employer ID number. While most businesses have ID numbers already, this is not always the case. If you do not have one, make sure you get in touch with the IRS for yours to be processed.

• Create a budget

When planning a payroll for your business, make sure you budget for taxes and wages. As an employee, you are required to pay Medicare and Social Security taxes. Also, most businesses are obligated to remit unemployment taxes, which is why it is important to plan in advance for these expenses.

• What services are included?

Before you choose a payroll service, make sure you take into account the services that a provider offers. Below are the typical services to expect from your payroll provider:

Payroll processing– This involves calculating the amount due at the end of the month for each employee. The payroll software should easily calculate wage rates, overtime, shift differentials, Social Security benefits, taxes, and holiday pay. After that, they pay employees by prepaid debit cards, paper checks, or direct deposit.

• Filing and submitting payroll taxes– This entails withholding employee taxes, filing your quarterly payroll tax reports, and even paying tax withholdings for the employees to the right agencies. Also, they issue employees 1099 and W2 forms every end of the year. Choose a payroll service provider that offers an error-free guarantee. This means that if there is any mistake, the provider will not just correct it but also be responsible for any fines you incur. 
• New-hire reporting: Several payroll services will report any new employees you bring on board on your behalf to the government.

• PTO Management: The majority of payroll programs track the number of sick and vacation hours your workers earned and used them to manage paid time off. Some solutions even handle time-off and subsequent approval process. 
• Employee self-service: Employees can typically access the payroll portal to view PTO balances, pay stubs, and year-end tax reforms.

 

Conclusion

Outsourcing your payroll service to a third-party provider helps to streamline your operations and ensure your workers are paid on time. However, the headache is choosing the right payroll provider. That is why we have put together the above ten tips to help you find the right provider. 

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• Source: Plato Data Intelligence: Platodata.ai