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Choosing Payroll Software for Your Business

When choosing payroll software for your business, the most important factors are the simplicity of use, compatibility with other platforms, the ability to evolve to your business’s changing and growing needs, and customization of fields to accommodate your business’ unique structure. Payroll software is much more reliable than the traditional paper-based payroll methods which are becoming extinct.

If your business has less than 500 employees, then the choice to use payroll software will suit you well and take care of your accounting and payroll needs seamlessly and automatically. Being able to afford the option to hire individuals to keep up with payroll is a nice luxury, but for the rest of us, payroll software is a much more practical choice.

Saving time and money are very important aspects of payroll software. Payroll software should be simple to use so that inputting employee time is effortless and calculations can be performed at the click of a button. Ensure that the payroll software you choose has the most up-to-date calculations, as outdated calculating can ruin your efforts to be organized while making your data obsolete.

Your software should be compatible with many operating systems so that invoices, checks and statements, payroll tax forms and printable catalogs can be ported over to other systems if needed. If your payroll and accounting are separate, then it will be necessary to ensure the compatibility of your payroll software to your accounting software unless you have an integrated accounting and payroll system.

Ensuring that your software will allow you to make multiple files under one operator will allow you to organize regular hours as well as over time, bonuses, commissions and other miscellaneous benefits for your employees under one heading to keep you organized. Obtaining graphs or charts of the previous weeks sales, comparing the last 5 years or the inventories of the last two years is a handy tool, so be sure your payroll software includes these functions. Software that uses the input of partners and customers is very useful, because it ensures that the updates to the software are based on human use.

Payroll software should include bookkeeping in the form of payroll accounting, general ledger, accounts payable and checks as well as accounts receivable, after-the-fact journal and payroll systems. The payroll software you choose should have flexible formating and easily customizable fields as well.

As small business owner, you may have to take care of the payroll all by yourself. Many people like you who start their own successful companies are intelligent, have field experience and an entrepreneur spirit to get things done. However, when it comes to accounting, and in particular payroll jobs, they often stumble. Figuring out the income tax, 401K and insurance contributions in generating each payroll check can easily take an hour or more each week. Why not to save an hour to be better spent earning profits or at the very least having an extra free hour to enjoy life? Most of small business owners have to work from dawn to dusk 7 days a week, some even think about to work 25 hours a day if they could. An easy-to-use small business payroll software package to satisfy the payroll requirements can be just one way of making that small business payroll jobs more efficient.

With so many payroll software companies out there competing for your business, each with their own set of claims and promises to help you achieve your goals, how could you possibly narrow down your choices? Whether you’re looking for a company that offers the lowest prices, or one that gives you the best service and quality payroll software for your money, it will all be easier once you learn to recognize some of the common mistakes that people make when choosing payroll software. Below are the 5 most common mistakes along with a few straightforward tips to read, heed, and be on your way to finding small business payroll software that best suits your needs.

Mistake #1: Choosing a Payroll Software Based Solely On Price

Price is certainly a major factor when it comes to the payroll system. The old adage, “You get what you pay for” couldn’t be any truer. Searching the internet for the best possible prices is one thing, but if you want great printing, you should make your decision based on the overall value you receive – not just because they have the lowest price!

Mistake #2: Assuming All Payroll Software are the same!

There are several payroll systems available that can take care of business needs ranging from small business to larger enterprises. All you need to do is to take a look around and make the right choice. You can choose from accounting suite such as Peach tree, QuickBooks, etc. If you are small business owner and has limited knowledge of computer and finance, stand alone software, such as ezPaycheck from halfpricesoft.com, may be a better choice. Such software is very easy to setup. For example, ezPaycheck comes with sample database and user can print first check in minutes.

A payroll software suits your business size is very important.

Mistake #3: Know Nothing about Small Business Payroll Software before Purchasing

Of course payroll software must calculate taxes accurately. But as payroll software for small business owners, it must be simple, straight-forward and user friendly as well. It cannot expect the small business owner to be an expert at computers and finance. If you start a payroll application and cannot figure out how to use the buttons after 10 minutes, it may a good decision to forget this payroll software.

The basic features of payroll software are:

- Calculate employee earnings and deductions

- Deduct federal, state, and local payroll taxes in accordance with the laws

- Print payroll checks

- Prepare and print related tax forms, such as W-2s

- Generate reports and keep IRS-required records

Mistake #4: Purchase a Payroll Software without Testing the Trial Version

Test drive trial version of the payroll software efficiently. Firstly, you should be very comfortable with the GUI and should be able to handle it on your own even before you make a purchase. Ask for trial version of the desired software. Many payroll software companies provides free download version from their web site. Make sure you test the trial version enough before making a serious purchase.

Mistake #5: Purchasing without Noticing Hidden Fee

Be sure to check for any hidden charges while making the purchase. You may need to pay annual charges for updates. Make sure you know how much you need to pay next year to renew it.

Income tax and national insurance contributions must be calculated and deducted from the employee each pay period, payslips produced for each employee and the tax liability accounted for and paid over to the inland revenue office. Calculating the deductions can be achieved using the HMRC CD-Rom while payslips represent an area which may well sway the decision.

Many medium and large companies employ a specialist wages department to perform these functions. Some medium sized companies may still choose to outsource the payroll function leaving many of the technical issues that might be encountered to a specialist payroll service.

Small businesses may choose to outsource the payroll function because they are not familiar with the intricacies of payroll although HMRC run regular paye seminars to assist employers. The payroll system adopted should calculates income tax and national insurance deductions and deal with tax code changes, new employees and changes to existing employees plus taxable benefits and allowances such as statutory payments for sickness and maternity leave, contracting out of the state pension scheme and student loan repayments.

The main benefit of manually producing the employee payroll in house is the low cost although the time spent might be better spent running the business which payroll administration can detract from. The cost may not be the cheapest option if a wages clerk is required to produce the payroll.

Purchasing payroll software can save significant time compared with manual calculations while outsourcing payroll may be more expensive but in some cases where there is a lack of knowledge the safer option. Although time is usually more important as the payroll production cost is not usually a big factor.

Outsourcing payroll adds a small additional cost to running the business but would normally carry worthwhile benefits in reducing the time spent on the function and reduces the payroll administrative burden.

Main benefits outsourcing payroll to a service provider

1. Time saving when calculating the payroll deductions and dealing with different and sometimes complex employee circumstances.

2. Using a professional outsourcing service to advise on potential payroll problems and difficulties.

3. The cost of outsourcing payroll should be compared against the cost of employing specialist in house payroll staff. Even when the payroll is outsourced some wages staff may be required.

4. Payroll service providers almost invariably use a payroll software package and normally produce accurate income tax and national insurance deductions and pay records reducing the prospect of problems with the tax authorities.

5. Payroll administration such as preparing the tax deductions schedules, dealing with starters and leavers, year end certificates for employees and the employer annual returns are normally all automated as part of the payroll service

6. The outsourced payroll company should also be responsible for producing employee payslips, advising tax and deductions liability and in larger businesses also provide a payroll analysis for accounting purposes.

Where to find outsourced payroll providers.

Finding a suitable outsourced payroll service is not difficult. Local telephone directories or searching the internet would produce many potential payroll service providers.

Many accountancy firms offer payroll services to their clients and although the prices may struggle to be competitive price is always negotiable. Using the business accountant for the payroll has advantages since a substantial cost area for most businesses is already known to the accountant since they prepare the numbers.

Choosing a payroll software package

The major alternative to outsourcing the payroll is for the business to acquire and use payroll software.

Larger companies require payroll software that has incorporated within it all the potential pay scenarios and also be capable of dealing with high numbers of employees. Large comprehensive packages can be complex to operate and require specialist wages staff. Small business may choose simpler less complex payroll software packages that meet the basic needs of the business.

It is important the person running the payroll within the wages function understands the payroll essentials and legal payroll administration requirements.

Choosing payroll software should save the business money against outsourcing the payroll and also retain control over the payroll in house. An ideal payroll package should take no more time that supplying employee details and gross wages to the payroll service and minimise the payroll knowledge required by the business staff responsible for wages…

If the business chooses to adopt a payroll software package then the complexity of the package should be considered and also the attributes and capabilities of the chosen software to produce all the payroll requirements in relation to pay and wage deductions, payroll administration and employee payslips.