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How to master small business payroll with outsourcing or payroll software PDF Print E-mail
Written by Administrator   
Sunday, 11 October 2009 18:44
For payroll processing, most companies, particularly small ones process their payroll manually using spreadsheets. As with anything manual, the payroll then becomes subject to human error.

If you doing your small business payroll via spreadsheets, quite simply, your doing it wrong, and you should update your payroll system now!.

Two main ways to improve payroll are.
  1. Payroll software (or Accounting software with integrated payroll)
  2. Outsourcing payroll services

If you have less than (say) 50 employees I highly recommend outsourcing you payroll needs. In my opinion outsourcing is king for these reasons:
  1. Outsourcing leaves the responsibility to payroll experts. People that know payroll properly and will correctly calculate holidays, sick pay and other payroll necessities like special taxes and benefits.
  2. Trust. I'm not talking about you trusting your payroll outsourcing company, I'm talking about your staff. They are far more likely to trust a payroll outsourcing company than they trust you. Even if you have an accounts person, the rest of the staff are likely to know this person. Having a face rather than a <faceless> outsourcing company taking care of payroll will only mean you staff will mentally question if that person got everything right. This just won't happen if you use a payroll outsourcing company. Quite the contrary. I found my staff automatically assumed the payroll outsourcing company always got everything right and never questioned a thing.
  3. Professional pay slips. This again ties in with the trust a payroll outsourcing company will create. When your staff get a professionally created pay slip made by a payroll company (and not from you or 'that person' who take care of payroll). If it comes from a payroll specialist they will be happy. Outsourcing your payroll = keep staff happy,. Remember they are there for the money, the don't want to lose even $10 a month because your own payroll systems are inadequate.
  4. Payroll outsourcing companies are cheap. I use to pay about $20 per month for payroll through an outsourcing company. While that adds up, one small mistake made because you (or someone who handles you payroll) missed something can really cause you problems legally.

If you have enough employees to employ someone doing payroll full time (probably also doing accounts), this might be a more cost effective way to manage payroll. You should however be sure get the right software for your payroll needs.

Here's the trick with payroll software. Simplicity. Try and find payroll software which has all the features you need but also is easy to use. You can do this by downloading trial versions of payroll software and trying them out. Look for payroll software which is task based and allows you to fill in the important data about your staff step by step, with big clear easy to recognize buttons and an intuitive interface. In short, if the payroll software doesn't leave you scratching your head and you enjoy using it, your going to make less mistakes (or you payroll person is).

If you plan on using payroll software, consider an Apple Mac for this purpose (and for your accounting work). This is because Macs offer far better security than PC's which is important when you will be storing payroll/accounting data. More importantly, payroll software for Macs is written by Mac users. These are people who value highly the user experience and work hard to make software nice to use and fast to learn.

One last thing. Even if you have a company big enough to have a dedicated payroll person (or accounts/payroll person) you should still look into payroll outsourcing. Get a quote from a payroll outsourcing company. Remember you will save on all the costs associated with staff. You will be able to systemize monitoring you staffs hours and simply pass the information to the payroll outsourcing company who will do the rest. Most important, payroll outsourcing companies are a great way to keep your staff happy when they get their payslip.

I am in now way affiliated with any payroll outsourcing companies, I just think that of all the good things I did for my business, hiring a payroll outsourcing company was perhaps the best.