The Benefits of using an online payroll system
Your everyday to-do list already exceeds the amount of time you can spend during your workday. This makes the added duty of payroll management a taxing experience for you as a small business owner. In fact, 40 percent of business owners reported spending more than 80 hours a year working on payroll and taxes. Almost half of the small business owners cited financial matters as one of the things that they liked least about owning a business.
You could benefit from a new online payroll system that makes your job easier and allows you to spend more time on other essential tasks. This guide can help you explore the benefits of an online payroll system and how it can easily handle all of your payroll information to ensure your team gets paid timely and accurately, and you as a small business owner get time freed up to perform your essential leadership duties.
How an Online Payroll Software Is a Good Payroll Solution for a Small Business
Many would agree that it’s a hassle to run payroll. From payroll taxes to employee benefits, it seems like it takes longer to run payroll each year. You try to automate the system, but it doesn't seem to help. If this sounds like you, online payroll services might be the answer you're looking for. Here are some additional reasons for you to consider:
Avoid costly mistakes
In addition to upsetting staff members when they don't get paid on time, there are rules and regulations that govern your payroll, such as penalties and late fees if you don't make payments on-time. You might enter the wrong pay rate for an employee in your HR software, or you might forget to add an employee’s dependent to their health insurance after their first child is born.
Another common mistake is deductions. You might take too much or too little to cover the costs of a garnishment, health insurance policy, or retirement account. This is not only discouraging for employees but it also eats away at your time as a small business owner by having to fix the errors—something you can’t afford.
Tracks your payment schedule and calculates the tax payment
With an online payroll system, you have a partner who tracks your payment schedule and calculates the tax payments. As a small business, the Internal Revenue Service (IRS) expects you to make payments quarterly. You also need to submit local taxes. This includes paying the estimated taxes your business owes as well as the money you've withheld from employee paychecks for the taxes they owe. If you submit an incorrect amount, you'll face fines and penalties.
Reports all taxable compensation
There are some perks, also known as fringe benefits, that you as a small business owner could provide to your employees that are taxable. Some are mandated by law (based on the size of the company and the number of full-time employees) such as workers' compensation, unemployment insurance, family and medical leave, and health insurance. Other examples of fringe benefits that are at the discretion of the employer are bonuses and membership to a fitness club. You need to know what category in which they land and the applicable tax rate for each one. When you submit your quarterly taxes to the IRS, you need to remit these reports and any taxes you've withheld from employee paychecks. Tax compliance is essential.
Automates mandated garnishments
A few of your employees might have garnishments against their wages for back child support or a judgment, and you need to deduct the correct amount each pay period. It can be a hassle and timely, such as running payroll reports to ensure the funds are deducted before payday. Although you should have the amount due in the employees’ electronic payroll files, it would benefit you to have an online payroll system handle this instead.
Automation of payroll can reduce overall expenses
From the time it takes to manually onboard new hires to ensuring your employees get paid on-time and accurately, costs can certainly add up. While your HR department might handle these functions, there is still a significant cost. Plus, there are additional costs that you might not consider, such as monthly fees and fines if your company isn't tax compliant or following wage laws. The automation of payroll can streamline these processes and reduce the risk of unnecessary expenses to your business.
No need for a payroll manager or specialized employee
You probably spend a significant amount of money on your HR department. When you choose an online payroll service, you no longer need to employ a payroll manager or other specialized employees to handle your full-service payroll. The right online payroll system comes with payroll features that make it easy to record employee hours, deduct for taxes and garnishments, and so much more.
Offers an employee portal
Unlike other accounting software, an online payroll service offers an employee portal that provides time tracking for your staff. It makes the onboarding process easier. With employee self-service, your staff can see their hours, check their tax deductions, health benefits, and back pay stubs. You might even find an online payroll system that has a mobile app for added benefits.
The right online payroll service can handle all of your tax filings for the IRS, local tax authorities, and state taxes, in addition to running payroll. It's a full-service payroll option. The online payroll system ensures your small business is tax compliant. It uses your company’s payroll data to determine the correct tax amount to send to the IRS, and state and local tax authorities.
When you offer your employee’s health insurance, you need to make sure the correct amount is deducted each pay period to cover the monthly fees, whether it be an individual or family plan. If there are updates mid-year such as a divorce or a newborn, those changes must be updated timely or you run the risk of having the change not taking effect until the next open enrollment period.
Local taxes can sometimes be tricky, and the tax calculations always need to be right. There are more likely many local taxes that you need to pay quarterly and at year-end. Some of these local taxes include:
- State and city taxes
- Sales taxes
- Payroll taxes
You also need to make sure that you submit the correct tax forms with tax payments, and an online payroll system can help you with this.
What's Involved in Implementing Payroll Software?
When you decide your current payroll processing method isn't working as well as you'd like, it's time to consider what's involved when you switch to a new payroll solution. While pricing is important, you need to make sure the HR software provides an easy and seamless way to pay employees. The payroll system needs to be user-friendly and easy to implement. Here are some things to consider:
Streamline implementation of payroll software
When you're choosing payroll software for your company's payroll and benefits administration, you need one that offers an implementation that's streamlined and user-friendly. You shouldn't need to do anything more than verify your employee records, including pay rate, withholdings, and other common payroll items, and import the new payroll software.
Benefits of a Payroll System
There are many benefits when implementing a new online payroll system. These include tangible benefits such as money saved and ensuring tax compliance, to intangible benefits such as employee satisfaction and employee retention. Let’s look deeper into the benefits:
Accuracy and Efficiency
When you make mistakes on your payroll, it can cost you a lot of money and employee discouragement. From the wrong employee pay rate to missing payments for the health insurance plan, an error with your payroll software can be an issue. Online payroll software is designed to provide you with accuracy and efficiency.
Keeps all the records in one location
Your payroll software should organize all of your employees’ payroll records so you don't have to. From payments to workers' compensation to the correct deduction for child support, these records are kept online as opposed to in filing cabinets in your HR department. This makes it practically effortless to review employee and payroll records if questions ever arise.
Makes payroll a breeze on payday
With the best online payroll system, your HR team should find that payroll is so much easier to prepare for payday. The goal is to make payroll as simple as possible while at the same time ensuring accuracy. With the push of a few buttons, the company's payroll is on its way to employee bank accounts through direct deposit.
Customer support and training
Even if a payroll system offers unlimited payroll options, you need to make sure that you work with a company that offers both customer support and training to ensure your HR department is ready to go.
No specialized skills needed
The best online payroll system doesn't require specialized skills. You won't need a payroll manager. Anyone in your HR department should be able to process the payroll with a few clicks. The company's payroll requires someone who can be trained by the HR software provider and can benefit from the customer support offered. You can even use someone in administration if your small business doesn't have a designated HR department.
Support for businesses and questions that arise
When you're using a new HR software program, there almost always comes a time when you have questions. If the FAQs section doesn't provide the answers, you need an online payroll solution that offers outstanding customer support to answer questions quickly, so you can get your payroll submitted on time and keep your employees happy.
Does your HR department spend a couple of days each pay period getting everything ready for payroll? If so, then you need an online payroll system that makes the entire payroll process easier. When the system is easy to use and intuitive, it saves your small business time, so your staff can concentrate on other important duties, such as accounts payable and onboarding new hires.
You and your team won't be stuck looking over timesheets and determining hours with a calculator. All the information you need to run payroll is already in the payroll software. It's already set up for you and only takes a few minutes from your HR staff to process payroll.
As a small business owner, you know how important security is, especially when it comes to information about your employees, pay rates, and tax information. You work hard to secure this essential information. If you use the wrong payroll solution, you might find this information is vulnerable. The best online payroll system offers layers of security.
Keeps employee, company, and other private information safe
The information found in payroll records can put you, your small business, and your employees at risk if it becomes available online or ends up in the hands of fraudsters. Some of the information that needs to be kept safe includes:
- Tax forms
- Social security numbers
- Bank account information
This information and more can be kept secure using an online payroll system.
When you opt for an online payroll system, you don't need to hire a payroll manager or outsource your payroll processing to a third-party company. This helps you save money and invest that money into your small business. Even after your business grows, you'll be able to keep your new payroll software and remain cost-effective. As a small business owner, you know how important it is for every aspect of your business to be cost-effective.
One reason that an online payroll system is cost-effective is that so many of the software features are automated. You need a payroll system that requires as little external help as possible from your staff. This automation needs to include updates to various aspects of the payroll system.
It seems like every few weeks there are new tax updates from the IRS and local tax authorities. These updates might include updates to income tax, employee tax, and excise tax. An online payroll system ensures your small business stays in compliance with automated tax updates. Without these updates, you might find yourself faced with fines and penalties from the IRS or state tax authorities.
An audit trail is a set of records that documents certain activities. For example, if you have an employee file a complaint that they weren't paid for overtime, the audit trail will prove that you did or didn't pay them. You might need an audit trail for the IRS if they determine your small business should be audited. Your payroll software should be able to create the audit trails you need to provide.
Many of the online payroll solutions allow you to add on the features you need. There are many payroll features that can make your life easier and save your HR staff even more time. Before choosing new online payroll software, it's a good idea to consider the types of features that your small business and employees would benefit most from having.
Access from anywhere
As a small business owner, you probably take your work home with you several times a week. An online payroll system with a mobile app or access from a laptop or home computer makes your life easier. When you're considering new payroll software, this should be on your wishlist.
Add personalized widgets that work with your business
A personalized widget adds functionality to your online payroll system, and it's designed to meet the unique needs and procedures of your business. These widgets can help you with tax information, employee information, onboarding, and a variety of other tasks. Not all online payroll solutions allow you to personalize widgets, so you need to make sure this feature is available for your small business.
You put a lot of time and effort into hiring the right members for your staff, and it's essential that you retain them. When there are problems with your payroll software and your employees aren't paid on time or at the correct pay rate, you might have to find replacement employees. Hiring new employees takes a lot of time, energy, and money.
With the right payroll software, you can adjust employee hours when someone forgets to clock in or decides to use PTO. It also helps you keep track of overtime hours, so each employee's paycheck accurately reflects the hours of work they've put in. You'll find that you receive fewer complaints on payday than you have in the past.
There are certain deadlines that you can't miss. If you do, you might be paying a lot of extra money in fines, interest, and penalties. Some of these deadlines include:
- Quarterly tax payments
- Local sales tax payments
- Federal tax payments
- Providing tax paperwork to your employees and contractors
The right online payroll solution ensures that you never miss a deadline.
Do I Need Payroll Software?
You might be wondering if your small business needs payroll software or if it's an expense you don't need.
Here are some things to consider:
- Are you spending more than a few hours each month on payroll? Yes? You should consider online payroll software.
- Are you providing paychecks for yourself and your employees? Yes? Online payroll software can streamline this process.
- Are tax miscalculations or mistakes a concern? Yes? Payroll software is essential to correctly calculate taxes.
- Is your business growing? Yes? Payroll software can free up your time to grow your business and continue to make the payroll process seamless as your business grows.
As discussed in this article, the benefits of using an online payroll system are plentiful. The right software offers you peace of mind and helps your small business run smoothly.
Ready to utilize an online payroll system at your small business?
Heartland is the point of sale, payments, and payroll solution of choice for small businesses that need human-centered technology to sell more, keep customers coming back, and spend less time in the back office. More than 750,000 businesses trust Heartland to guide them through market changes and technology challenges, so they can stay competitive and focus on building remarkable businesses instead of managing the daily grind. Learn more at heartland.us