Accounting Payroll: Payroll Processing

There is more to managing small business payroll than writing checks and handing them out to employees on time. You need to keep accurate records, calculate and pay payroll taxes, and communicate effectively with employees. Many small business owners are finding that they can simplify the process by outsourcing to a payroll provider to manage the entire process, which can provide your business with a number of important benefits.

Save Time

Using an outsourced-payroll solution is typically more efficient for a small business than processing payroll internally. Leaving payroll to the experts frees up hours that you can devote to other important parts of your business. Whether it is your time; staff time; or a combination, chances are the hours could be better spent winning more business, improving customer service, fine tuning business operations, or launching a new product line.

Time saving areas could be:

-Processing payroll

-Cutting and distributing paychecks

-Calculating and paying withholding and employment taxes

-Preparing and distributing W-2?s and 1099?s at year end

-Handling employee payroll inquiries

Save Money

Many business owners underestimate the cost of processing payroll internally by failing to account for all the hours spent and resources allocated to paying employees and maintaining payroll paperwork. A thorough cost assessment usually proves that a small business saves money by outsourcing the processing, tracking, and filing of payroll documents.

To assess your own internal payroll costs, consider the cost of your time and the time of anyone who processes or "touches" payroll. Often, many people in small companies are involved in the various parts of payroll processing. The savings outsourcing provides since an outside provider can handle all the responsibilities involved in managing payroll and answering employee questions. A small business can often eliminate or reallocate an internal payroll resource.

Avoid Penalties

Calculating federal, state, and local employment taxes and filing payroll-related tax paperwork can be more than just a hassle. If it's done incorrectly, your small business may incur penalties and even interest on money owed because of the mistake made. In fact, it is estimated that one in three small businesses receive a tax penalty costing over $800.00 each year. Outsourcing payroll does away with the risk of many of these costs and hassles because:

-An outsourced-payroll provider often calculates payroll taxes more accurately because of a high level of expertise and a close tracking of regulation changes.

-Monthly or quarterly employment tax reports are managed by the payroll service, ensuring they are submitted correctly and on time.

-Payroll providers could assume penalties that come as a result of incorrect tax calculations.

-End-of-year paperwork such as W-2?s and 1099?s are handled directly by the payroll provider, ensuring that they are sent out on time.

Source: http://runequestwilderlands.blogspot.com/2012/02/payroll-processing.html

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