SYSTEMS MANAGEMENT
Making payroll time pay off
For most people in America, payday is a happy affair. But for
millions of the nation’s small-business owners,
it’s a complex administrative chore that eats valuable
time.
According to a new study by the National Federation of
Independent Business (NFIB), America’s largest
small-business group, nearly two-thirds of small employers
still prepare payroll in-house. Businesses with fewer than 20
employees are most likely to do payroll themselves, but half of
small firms with 20 or more employees also do payroll
in-house.
Usually the task falls to the owner, while some assign it to
an employee and a few pass it to an unpaid spouse or family
member. Of business owners who do their own payroll, only 62%
use spreadsheet software, and about one-third run payroll
through their regular accounting software (such as
QuickBooks).
Some say they do it themselves because that’s the
cheapest method. Others say they want to control the
process.
But how much is your time worth? And what could you or others
be doing with that time to help grow the business? Doing
payroll yourself to stay in control is like typing letters on a
typewriter so you don’t give up control to a computer
with word processing software.
A payroll service acts only on your orders and information.
You still control everything about it. If hands-on is a must,
there are online payroll services that let you manage the
process yourself.
Processing payroll correctly requires that you meet a long
list of tax, insurance and legal requirements. And if your
business offers any benefits that involve payroll deductions or
accounting issues — like health insurance or a retirement
plan of some type — that’s another reason to
switch.
Bottom line: Payroll is a task fraught with dangerous red tape
and hidden costs and a single misstep can cost you dearly.
Outside payroll processing services are a good option. First
off, no business is too small to use one; most will handle as
little as a single employee. With services easily accessible
online, you’d be a bit daft not to at least consider the
option. Here are some things you should know:
-
Payroll services are highly competitive. Basic processing
typically costs between $2 and $3 per check, plus a base fee.
-
Expect small additional fees for account setup, adding or
dropping employees and changing information.
-
For a complete solution, expect to pay $3 to $5 per paycheck
issued.
-
Without proper knowledge of payroll tax rules and procedures,
it is easy to make mistakes. For that reason alone, many
small businesses use an outside service.
-
Each pay period, you may still need to submit payroll data to
the service, via phone, fax or online. Even if salaries are
fixed, your approval is needed to make payments.
— Daniel Kehrer, editor,
www.work.com
dkehrer@business.com
