As 2005 gets underway, you might consider eliminating your payroll pains through outsourcing. Whether you process payroll manually or use a service, the outsourcing options available to small businesses are better than ever!
If you're like most small business owners, you long for the good old days. Remember when you first started your business? Everything was about growing your business. But over time, you got bogged down with tedious, time-consuming administrative work that prevents you from focusing on your core business. Instead of growing your business, you're suffocating under a pile of mind-numbing paperwork.
The worst culprit? Payroll.
Even experienced business owners find that payroll is a pain. For starters, you've got to keep track of payroll regulations and changes in withholding tables--a time-consuming task. Calculating the actual payroll amounts and deductions is equally tedious. It's very easy to make a mistake. Then there's the arduous chore of writing checks and making all the proper quarterly and end-of-year filings for federal, state, and local payroll taxes.
It's not uncommon for small business owners to spend between two and eight hours processing each payroll if they do it manually. Mistakes are costly. Employee morale dips, and employees lose faith in management when you give an employee a check or W2 with errors. They may forgive--but they don't forget.
The Internal Revenue Service (IRS) never forgets and is far less forgiving than employees. File late or with an incorrect amount, and you'll have to pay a payroll penalty. Every year, four out of ten small businesses pay an average fine of $845 for payroll errors. When you add it all up, that's billions of dollars in fines. Plus, there are new fines in the works that will penalize you if you don't keep good payroll records. California passed a law that imposes a $750 fine on small businesses that aren't able to quickly produce accurate payroll records upon an employee's request. Experts believe that many other states will follow with similar legislation.
When you consider these penalties and the value of your time, processing payroll internally can be a very costly proposition. Even if you've already outsourced, there may be room for improvement. If you're tired of all the headaches associated with payroll, it may be time to take a fresh look at outsourcing payroll. And, if you've already outsourced payroll, it's worthwhile to consider whether your current service is giving you everything you want.
What's New in Payroll?
The Internet has greatly improved the process of outsourcing payroll. For instance, with an online payroll service, it's possible to enter data and view it if you have access to a web browser. Once you enter your payroll data, the service automatically calculates, deducts, pays and files all federal, state, and local taxes. Paychecks can be printed on your laser printer or can be routed to your employees' bank accounts via direct deposit. W-2s are automatically prepared at the end of the year. The key benefit of online payroll is enhanced control. Traditionally, payroll providers require small business owners to call in payroll at a designated time, even if that means having to leave an important meeting with a customer or an employee. With an online service, payroll can be processed whenever it's convenient.
Control also comes through the ability to modify payroll information in real time and view your payroll calculations instantly.
With traditional "offline" payroll providers, the small business owners act through an intermediary--the payroll clerk--who enters the data. When mistakes are made--which frequently happens--the small business owner doesn't know it until the checks arrive.
Finally, control is increased through the availability of reports that let you track and monitor your payroll. Employers have access to online payroll reports in real time after logging into a secure website. Similarly, employees can log in and access and print their payroll records, alleviating an administrative burden that frequently arises when employees need proof of payment history for loan applications and other purposes.
Beyond increased control, online payroll lets small business owners save time and money. It only takes a few minutes to process payroll online, so time is freed up for more important things, such as gaining a new customer or spending time with your family.
How do the new services save money? Because the new online payroll services don't have the same cost structure as traditional payroll services, they can charge 30 percent to 50 percent less. Moreover, many payroll services guarantee you won't incur a payroll penalty, which can represent a considerable savings.
Taking Control of Payroll
Outsourcing payroll frees you from wasting time, money, and resources on a tedious task that is ancillary to your core business. Getting started with payroll outsourcing is easy enough. You can find the payroll service that's right for you by searching on the web or by asking your colleagues for a recommendation. In many cases, you can simply enroll online and get started immediately.
The Bottom Line
Making payroll is something that small businesses have to do. But the good news is that from a process perspective, it's getting much easier to "make" payroll. Switching to a new payroll service can alleviate pain and let you focus on what's most important: growing your business with focus and attention, just like you used to do.
Michael Alter is president of SurePayroll. His company offers a web-based payroll service designed exclusively for small businesses. For more information, phone 877.954.SURE or visit www.surepayroll.com
