This is a service aimed at helping employers to pay their employees.
However, managing a payroll, however, is about more than just writing paychecks. When handling payroll responsibilities you also must often handle:
- Filing quarterly reports
- Withholding employee taxes
- Paying withholding to government agencies
- Making summary filings at the state level
- Managing employees’ health and pension plan contributions
- Handling state disability, unemployment and family leave assessments
As a result of this it is usually advisable to outsource for external Payroll services providers other than employing someone in your small business to do the task.
Payroll services vary in cost, but their pricing structure is pretty standard. Most online payroll services charge users a monthly flat fee, based on the services being provided and the number of employees. Many of the services that we found offer businesses different packages. For example, a basic package might only include the running of your business’s payroll, while more advanced packages might also include paying your taxes.
How payroll services work
Employers agree to compensate an employee for services provided, withholding a portion of the earned compensation while paying to third-party payroll providers for expenses including health insurance, workers’ compensation, FSA, etc.
The government receives its share through social security, Medicare, and federal, state and local taxes. Employees collect the money remaining after taxes and withholdings.
Benefits of using payroll service
- Cost savings: it’s much cheaper to use a payroll service than to do the work yourself or hire a bookkeeper to do it.
- Saving time: the time it could take to make sure week-to-week compensation changes such as bonuses, overtime hours and missed work time are calculated correctly and keeping up with constantly changing payroll taxes at the federal, state and local level, and facing fines for late payments is reduced when on uses a payroll service.
- Employee access: with payroll services, staff members can log into their accounts on their own when changes need to be made.
- Mobile access:
- Error reduction: it ensures no manual errors occur when writing out employee checks. He said using an automated payroll service has allowed his company to navigate the often-complicated waters regarding payroll taxes, withholdings, insurance and profit-sharing.
- Works with or without QuickBooks.
Choosing a payroll service provider
When choosing a payroll service provider, you should look for that which might be right for your company. For the small business owners, some of the most important factors to consider include the cost, ease of use and customer service support.
Before making a decision, you should ask the potential payroll service providers a number of questions, such as:
- How long they have been in business.
- How often they update their tax tables for compliance.
- Whether they have other clients in your industry.
- How important your business will be to their company.
- Whom you should go to in case of a question or concern.
- The structure of their customer service department.
- Whether they can integrate with your employee benefits offerings.
- How you can monitor and track all of your payroll transactions.
- How they will handle your business as your company grows.
- What their fees and contract policies are.
You should also watch out for any potential red flags when researching potential online payroll providers. Here are some of the things to watch out for:
- Make sure the company you outsource your payroll is trustworthy and dependable so you can be sure your critical information is in good hands. The company should be bonded and insured.
- Make sure the online payroll service is properly paying the IRS on your behalf. If they aren’t, your business could incur huge tax penalties.
- Make sure your online payroll service provider is aware of your payroll tax requirements and deadlines.
- Since this is an online service, make sure they company provides a secure connection to ensure your all of data is protected from prying eyes.
- Choose a service that is very transparent and up front with its clients. They should offer a way f to oversee all of their payroll and tax activity.
Read more: http://en.wikipedia.org/wiki/Payroll