Payroll Software or Payroll Company – Which One Does My Business Need?

Do you remember the days of only having to cut one check per month to yourself as the business owner? As your business grows, so does the number of employees which makes payroll (and other employee management tasks) difficult to stay on top of.

It’s at this time you begin to consider your options for operating more effectively and efficiently. Do I need payroll software or a payroll company?

Here are some things to consider with each:

Payroll Software

• Payroll software helps ensure your employees are paid accurately and on time through automating the payroll process.
• Reputable software is continually in the development/upgrade phase with new functionality and enhancements being added periodically; they’ll also keep up with compliance surrounding payroll legislation. This means that you won’t have to buy new software each time a new law is passed or a certain method is required for reporting.
• You can stop writing paper checks with payroll software; payroll can be deposited directly into each employee’s personal account.
• Each business has specific needs, which is why there are so many different types of payroll products available. There’s no “one size fits all” software.
• Payroll software is often an affordable solution for limiting the amount of administration and operating more efficiently in the workplace. Some software has a onetime cost, whereas others are provided on annual or monthly subscriptions. Some charge per employee.
• Software doesn’t “do it all.” You will still need an administrator to enter information and oversee payroll. Depending on the complexity of the software, extensive training may be required to use it.
• Smaller firms with a stable and salaried staff and minimal tax obligations may be better off processing payroll on their own with the help of software (vs. the option of hiring a payroll service provider). But, keep in mind that a payroll error and IRS penalty can grossly affect your bottom line. How likely are you to make an error or overlook something?

Payroll Company

• For large companies especially, outsourcing payroll to a payroll service provider is anattractive and valuable alternative to in-house processing.
  • A payroll company’s basic services include calculating payroll and tax obligations for each employee, printing and delivering checks, and providing management reports. Paychecks can be issued on a weekly, bi-weekly, monthly, or even yearly payroll basis.
  • Using a payroll service provider can be especially helpful if you have to pay payroll taxes for multiple states – let someone else handle it!
  • Added benefits of utilizing a payroll company can include services such as automatic check signatures, issuing W-2s, and the direct deposit of checks. Not everything is included in the “basic costs.”
  • Filing state and federal payroll taxes for your business is typically offered at little or no cost. However, they likely will not calculate your local or city taxes – inquire about this before beginning any new relationship so that nothing falls through the cracks.
  • Each pay period, payroll data has to be “called in” to the service provider. This can be done over the telephone or internet through online payroll reporting.

Do you know which one is right for your company yet? As we said earlier, there truly is no “one size fits all” approach, which is why Employer Solutions Plus represents vendors in multiple categories.

When comparing the cost of each, you need to look beyond the initial price tag and ask yourself how much time you will spend managing the payroll process each month. As you know, time is money and if payroll is pulling you away from your revenue generating activities week after week it may cost you a lot more than you think to manage in-house!

Contact our team to discover which option is best for your particular business.