This article will breakdown payroll for a small business owner. Learn about the different options you have when it comes to payroll.
If you own or manage a small business, serving your customers is only part of your workload. Plenty of small business owners overlook the labor, time and effort required to complete payroll for small business. A small business that fails to pay its employees in-full and in a timely manner will inevitably face a workforce backlash and high turnover, as well as possible legal consequences. Your small business payroll should be treated with the same level of attention to detail as you provide to your clients. After all, work won’t get done if your employees aren’t appropriately paid.
Why Small Business Payroll is Important
Payroll administration accounts for more than the weekly payments provided to employees. It also includes the following:
- wage garnishments
- pay raises and pay cuts
- sick pay
- paid time off
- other compensation-related issues
If a small business is unable to perform accurate and on-time payroll, it may create all sorts of legal problems that might bring a business to a standstill.
In addition, the federal government has established an array of employment laws that every small business must adhere to. Specifically, the United States Department of Labor has established highly detailed wage laws. The Internal Revenue Service enforces tax laws pertaining to employee compensation. Federal and state taxes must be withheld from each employee’s weekly pay in order to comply with the law. There is also the highly nuanced matter of each employee’s particular withholdings as indicated on his or her W-4. This extraordinary level of complexity is precisely why so many small business owners opt to outsource payroll for small business duties to a professional payroll service.
How to Process Small Business Payroll: Outsourcing
As mentioned above, many small business owners find it prudent to outsource payroll for small business duties to those who specialize in payroll services. All one has to do is forward employee information, wage garnishment information and other pertinent details to the payroll experts and they will perform payroll functions at the designated increments. The beauty of outsourcing payroll for small business responsibilities to payroll experts is that these specialists have an extensive knowledge-base that spans wage laws, tax laws, employee garnishments and everything else related to small business payroll processing procedures.
Payroll for Small Business: In-House Payroll
Some business owners opt to perform all payroll for small business functions in-house with an employee who understands the nuances of small business payroll responsibilities. It is possible to use payroll for small business software or even a Microsoft Excel spreadsheet to establish weekly/biweekly payroll information. This data can be saved and forwarded to a third-party company that will cut the employee checks or perform the appropriate direct deposits into small business employee bank accounts. However, performing payroll for small business duties in-house often proves to be quite the challenging task, especially if the small business has more than about a dozen employees.
If you are absolutely insistent on conducting payroll for small business without outside assistance, it is prudent to lean on payroll software or a Microsoft Excel spreadsheet to perform the necessary math. This way, the odds of an employee being paid too much or too little will be greatly reduced. Examples of such payroll for small business software programs include Sage Peachtree and QuickBooks. Each of these programs is commonly used by small businesses as they are easy to use, affordable and extremely reliable. Such software is generally programmed to comply with the federal and state governments’ wage laws, but these laws can change frequently, so make sure you keep your software up-to-date. As an example, the Department of Labor has instructed small business owners and other employers that they can round employee work time down or up to the nearest one-tenth of an hour, quarter-hour or five minutes. Tap into the computing power of software programs and you won’t have to worry about sweating the “small stuff”. The software will do the brunt of the work for you so you can focus on solving problems that positively impact your small business’s bottom line.