If you run a business and have employees working for you, it’s apparent that you’ll have to pay them. This is where payroll accounting comes in the picture as you have to deal not only with the employee compensation but also the resulting taxes.
Now, you could do these payroll calculations manually using a spreadsheet or choose to outsource it to a payroll accountant. Maybe you could approach an established payroll processing company that will take care of everything necessary.
Although all these options are valid, there’s one more solution you can go for. You can opt for software to take care of all your payroll processing woes in-house. But before you go ahead with this, it’s essential to determine whether such software is worth investing in.
To help you make a better decision, we’ve compiled a list of questions you must ask yourself before you put in money into payroll processing and accounting.
How Much Is My Current Payroll Process Costing Me?
When you think of it, this question is rather important. To ascertain this cost, you can draw up an estimate by adding up the time spent both by you and your personnel on payroll accounting. Go through the list of tasks involved in processing payroll and the subsequent time spent on each of these tasks. Once this is done, allocate rates to this on an hourly basis. Now multiply the two elements, and the computed figure will be the annual cost of accounting for payroll for your business.
But… Will The Software Ensure My Business Remains Compliant Of All The Law?
When your payroll and accounting is available as one unified central solution, it eliminates the risk of errors that usually happen with entries made manually. With an automated payroll processing software in place, you’ll not have to worry about being compliant as it takes care of the data on that front as well. You just need to make sure that the software you chose is in line with your state and federal payroll tax payments and reporting.
Why Can’t I Take Care Of My Payroll On A Spreadsheet Though?
For several small businesses, using a spreadsheet for payroll is a common practice. What they fail to notice is that basic spreadsheets are a highly sophisticated application that can only be exploited to its full potential by people who know how to work it. More often than not, these composite sheets are handled by people who aren’t proficient with the application, and the results are at times disastrous, not to mention highly time-consuming.
Add to the equation regulatory compliances to be factored in the calculations and the probabilities of your business being subjected to penalties shoot right up. This makes it necessary for you to make the switch from spreadsheets to a proper payroll processing software.