According to a National Business Association survey, 27% of small business owners spend more than 5 hours per month on payroll. That’s 60 hours each year! Even though that number might not sound like a lot, imagine what you could do with all of that time if it wasn’t devoted to payroll. Payroll doesn’t have to be incredibly complicated, especially if you follow just a few of our suggestions below. Take a look at these tips for payroll improvement and our favorite software solutions below:
Tips for Payroll:
- Establish a Budget: Know what your payroll budget is long before hiring an employee, and make sure that you’ve allotted for both wages and taxes. As an employer, you’ll be required to pay Social Security and Medicare taxes, too which means being prepared from day one. You should save around 8% per employee’s wages to cover these two taxes. On top of that, make sure you understand your state’s minimum wage and labor laws and what those might mean for your business.
- Do it Right From the Beginning: Have a system in place for new hires. That means gathering necessary information before an employee’s first day along with filing appropriate paperwork after they start. Of course, have new employees fill out a W-4 right away, but also check to see if your state requires any a state-specific forms as well. It’s always easier to knock these out first so you don’t have to play catch-up later.
Did you know you can make up to $9,600 per new employee through tax credits? Now that’s definitely something to consider when onboarding new team members.
- Maintain Your Records: The FLSA (Fair Labor Standards Act) requires certain records be maintained and also has specific regulations for how long records should be kept. Establish a system for record keeping and remember to stick with it. Try designating a specific day to work on record keeping, or hire a dedicated accountant to do it for you. Don’t forget to check-in on your state record keeping requirements, too. Those states can be very sneaky sometimes…
- Pay Attention: Keep an eye on rules and regulations surrounding payroll. Because these laws can change (and do!), you’ll want to investigate new laws annually. There are many, many aspects to payroll, and if you don’t stay on top of your game, something could easily slip through the cracks.
Best Payroll Software and Integrations:
Formerly known as ZenPayroll, Gusto distinguishes itself as the payroll software all-star for modern business. With easy setup and integrations with popular accounting softwares like Quickbooks and Xero, it couldn’t be easier. We like Gusto’s user-friendly reporting and interface which allows employees to enter their own information online and access their own W-2s and paystubs. Plus, Gusto support will setup your account for free with your past providers login credentials! Your bookkeeper can now spend valuable time on other important tasks.
On top of all that, we really like some of the features they have which allow you to provide a personalized payroll experience. For instance, you can add custom thank you notes to paystubs. A little personality goes a long way with employees and this is just another way to strengthen your already awesome company culture.
- What’s the cost?: Gusto has a higher price point than some of the other softwares we will mention below. Plans start at $29 per month plus $6 per employee.
- Note: Payroll can be setup to run automatically with fixed salaries!
It’s no secret that we’re big fans of Intuit; we’ve professed our love for Quickbooks a time or two. It should come as no surprise that one of our favorite payroll softwares is Intuit’s Quickbooks Payroll. With three, easy to understand, scalable plans, you’ll be able to choose a payroll system that’s right for your business model. The basic plan includes the ability to run paychecks instantly while the enhanced (and most popular) plan includes filing and paying taxes automatically, too. To take it even a step further, Intuit offers a full service option which means you’ll never have to worry about payroll at all.
- What’s the cost?: With the basic plan starting as low as $20 per month, there’s definitely a plan that’s right for you.
- Note: As you add employees, your monthly plan will increase $2 per employee.
Wait for it… Zenefits payroll is free! Even though it’s more complex than some online HR software providers, it does offer a single place to manage all your HR needs such as payroll, benefits, compliance and more. It integrates with Quickbooks Online and Xero, two of our favorite accounting platforms. Many processes can be automated and it’s a perfect match for small businesses with less than 50 employees.
- What’s the cost?: You will want to make the Zenefit choice before 2016 is over because they are changing their pricing model from free to $25 per month + $4 per employee per month.
At first glance OnPay might seem more expensive than a few of its counterparts, but when you realize that you are allowed 10 employees on payroll plus subsequent tax filing, it could be money very well spent.
- What’s the Cost?: Plans with OnPay start at $39.95 (plus $8 for direct deposit) for up to ten employees and increase from there. Your monthly payment includes unlimited pay runs, payroll tax filings and local check printing.
- Note: OnPay is smart device compatible which means you can access payroll anytime, anywhere.
Beware of These Payroll Pitfalls:
- Many other payroll providers are hard to navigate, have outdated interfaces and lack strong reporting features. These options can often end up negatively affecting your business, especially if you are just getting started with payroll.
- Some payroll providers claim to integrate with Quickbooks Online, but in reality, they don’t. Instead, they may provide a file that needs to be manually uploaded or is difficult to set up and manage. Steer very very clear of these options.
In 2013, the IRS issued 7 million payroll penalties to U.S. businesses. With 33% of small businesses being fined for incorrectly completing payroll, often because they’re trying to do it on their own. And while everyone makes mistakes, that’s a lot of mistakes. It’s worth it to do your research and choose your payroll software wisely. Understanding your payroll software options and choosing a software that’s right for you is imperative.