Many companies prefer outsourcing their business payroll online for one major reason: An online payroll service program does the majority of the work not only running payroll, but also for tax filing and compliance.
The payroll service bureau makes sure that the taxes are done properly; if they make a mistake, it is up to them to rectify the problem. If your business makes an error, the payroll provider will work with you to help clear up the issue.
You will save time doing business payroll online. Instead of committing a specific employee to a certain amount of time weekly, and more when your quarterly and annual tax returns are due, you will only be responsible for providing the number of hours and rate of pay for each employee for each pay period, which will be used in the payroll service bureau software on the provider's end.
Your staff can be redirected to other tasks. Time saved on these tasks can enable your employees to focus on revenue-producing tasks or tasks directly related to running your office. You may even be able to reduce the number of employees you need.
You benefit from your business payroll online provider's expertise. If the IRS or various state governments raise questions about certain issues (your tax rate or whether you have paid your tax on time, for example) your payroll provider will work to fix the problem.
This happens more often than it should; The IRS and state governments are often mistaken, but it takes time and knowledge to straighten out the situation. Your payroll service program will take care of such issues, saving you time and effort.
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Simply answer a few questions about your payroll needs to get the best solution for your company:
Online payroll is not for everyone, though; When evaluating your specific needs first consider whether you are planning to Outsource Payroll or use In-House payroll software:
If you are considering doing your payroll in-house, which is better: small business online payroll processing services or small business payroll software?
Size matters in two ways:
2. How big is your company? Recommendations for what you should be looking for when you are outsourcing payroll depend upon the Market Segment in which your organization falls:
It is imperative to sure the business payroll online company you will be doing business with is bonded. Don't be lulled into complacency by assurances that the payroll services company you are considering has been in business for years.
Make sure the Bonding protects you from two key things--embezzlement and business failure. In either of those cases, you may have paid the money intended to go toward your taxes, but if that money disappears, you will still need to pay--again.
Bonding protects you in case your payroll service provider goes under. In this case, their insurance company will be responsible for getting your money back to you.
However, be sure your business payroll online provider is bonded for BOTH embezzlement and business failure: in one instance, a privately held payroll service in Maine was bonded only for business failure, but not embezzlement.
When the principals of the vendor left town without paying the taxes for their clients, the clients turned to the insurance company that underwrote the bond. The insurance company refused to pay the overdue taxes for the clients because, as their lawyers argued, the payroll services provider did not actually "fail", instead the principals "embezzled" the client's tax money.
Once you have ascertained that the payroll service program you are considering are bonded, look for business payroll online services that offer you a single point of contact.
Some payroll services use a call center for their customer service, which means you will probably get a different customer service representative whenever you call with questions. This can be time consuming, especially if you have an issue which takes more than one phone call to resolve; you will need to describe your issue over again to the subsequent customer service representatives.
In addition, find out where the payroll service program's call center is located, as more companies are outsourcing their call centers offshore. The local, single point of contact tends to be more personally accountable to you, and results in more issues resolved quickly.
Be sure that one of the features your payroll service bureau software offers is the ability to see "net" before the final processing is done. This enables you to catch any mistakes before the check is issued--a big time saver. In addition, look over the various features and be sure they are easy to use and you are comfortable with the format.
Tell the payroll service bureau software provider YOU wish to be the Address of Record. You want YOURS to be the address of record, not your payroll service program. This means all IRS and state government tracers, or notices, are sent to you. You then forward them to your payroll processing services provider for them to address.
Although this may seem like an extra unnecessary step, this allows you to see notification that you may be out of compliance when the notices are issued. If the tracers go directly to your business payroll online service provider, they may pile up, unaddressed. In the case of the Maine company from above, notices were literally thrown away, until companies they worked for were dangerously out of compliance, with heavy fines assessed, and they were unaware of any issue at all.
Publicly Traded vs. Privately Held Payroll Processing Services: Some people have the opinion that large, publicly traded payroll outsourcing services like Paychex or ADP are better than privately held payroll services, or those owned by a bank.
By being publicly traded, certain procedures and financial information are disclosed to the public, making it far more difficult for them to disguise any issues they may have. Although this is true, it is also true that the SEC does not regulate the big payroll services any differently than it does the smaller ones--they are all accountable to the same degree.
How to Do Payroll Checklist/Organizer to assist you in gathering necessary data.
Payroll Processing Software Implementation Information you will need to provide your corporate payroll services provider.
Three Common Payroll Processing System Mistakes to Avoid when choosing an outsourcing payroll provider.
Special types of payroll have different reporting needs:
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