The difference between a payroll service and a payroll software
Many small business organizations have an option to use or not use the payroll system to pay their workers. Yet it has been proved repeatedly that it is most efficient to use the payroll system, of either a payroll software or a payroll service. It is not only important for a business enterprise to use a payroll system but also needed by the regulatory agencies, breach of which will attract a fine.
Moreover, You can outsource payroll to an accountant or payroll company (which can be expensive), or choose to handle the task on your own.
What about payroll tax filings? Here too, an employer can entrust their payroll providers to handle the payroll tax filing tasks, or you can choose to handle these tasks yourself.
So how do you choose? What is a payroll system going to include that is the most efficient, and cost-effective? Chances are, you are going to end up selecting either online payroll software or a full-service online payroll option.
The payroll software
Employers can choose to use payroll software. You enter the time details on your own, and the software calculates the paychecks. You can then print the checks or send them via direct deposit.
- Advantages
- Payroll software can be an affordable option.
- With payroll software, you are in control and can process payroll on the fly.
- Payroll software may have online access. This can be particularly helpful for small business owners who may want the convenience of online access from any location.
- Online payroll software can be automatically updated which means you don’t have to worry about installing updates to keep your software current.
- Disadvantages
Some payroll software is designed for experienced accounting professionals.
Solution! Choose software that is designed to be easy-to-use for small business owners.
Fees might be imposed for cancellation or support.
Solution! Before signing up, be sure to read the fine print and find out if there are a long-term contract and/or cancellation fees.
You are responsible for payroll taxes. You need to compute payroll taxes and make sure that all forms and payments are completed accurately.
Solution! Be sure your payroll software offers free reports that clearly show the number of your payroll tax liabilities (… but filing on time is ultimately your responsibility).
Forgotten payroll tax payments (or paperwork mistakes) could happen and can be costly.
Solution! Consider using full-service payroll software.
Full-service payroll
In the past, a payroll service might print and deliver paychecks to your business. But now, many small business owners save time and money by using full-service payroll and direct deposit. The full service payroll solutions now allow you to manage your online payroll, and provide a hands-off solution for federal, state and local payroll tax reporting.
- Advantages
Full-service payroll can be the least costly option for a small business when considering the time saved for filing payroll taxes.
Federal, state and local taxes are filed on behalf of your small business with the full-service payroll option.
Full-service online payroll systems can provide automatic updates and the convenience of processing payroll from any location 24/7.
- Disadvantages
The cost of full-service payroll will be more expensive than the basic payroll software option.
Ultimately you are responsible for your payroll tax filings.
Solution! Be sure you are dealing with a reputable company with a good rating from the Better Business Bureau. Payroll providers should be able to provide you with reports of timely tax filings.
Some full-service payroll options may have setup costs and charge significant support fees.
Solution! Make sure when you sign up with a payroll provider that you are aware of any additional fees upfront.
Conclusion
Hidden fees. Before committing to a payroll method, you will want to carefully consider the fees for cancellation, customer support, setup, etc.
Consider levels of service. Is the software easy to use? What customer support is available? For full-service payroll, how do you record employee hours and review the amounts paid? If you’re searching for online payroll software for payroll service providers , does the program have affordable rates?
Updates are critical. You need to be assured that payroll tax tables are timely and up-to-date. Many online payroll software options have automatic updates. Updates on software that has been downloaded will be your responsibility.