Payday is a day of rejoice for your employees. For many small business owners, however, payday spells out an extended workday full of number crunching and hair pulling. This frustration is only compounded by the possibility of payroll mistakes leading to steep penalties. If only it were as simple as writing a check or authorizing a transfer of funds, you could free up hours to dedicate towards actually running your business. Fortunately, a payroll service can be the fulfilling answer to all of these troubles.
First off, it’s important to determine if it’s necessary to run a payroll at all. Do you have employees that you pay regularly? Do you pay any 1099 contractors? Will you pay yourself? All of these scenarios are reason enough to run a payroll depending on the nature of your business and tax situation. Although a simple owner draw is a common way for owners to pay themselves, it increases audit risk. Also, there are potential tax benefits to taking the payroll expenses. Determining whether you need a payroll isn’t the largest headache associated with this area of your business, but it’s still recommended to consult a tax advisor when figuring out the best way to pay yourself and your employees.
Many small business owners don’t want the additional headache of dealing with and setting up a payroll service. Yet, it can eliminate countless future payroll mishaps and conclusively save you time and money. To understand the benefits of a payroll service, one must first know the downsides of forgoing one.
Forgoing a service means calculating payroll taxes yourself and withholding the correct amount per employee for various state and federal agencies. Although you may not be a payroll expert, these agencies expect expert level compliance. Miscalculating these figures can end in costly penalties or even more costly audits. For perspective, the IRS levies billions of dollars against businesses who make employment taxes mistakes every year. If you and your employees have a retirement account set up, this is another figure to take into account each payday. Not only will you take extra time to crunch payroll numbers, but you also have to make periodic tax filings. All of this goes away with the right payroll service.
Now that you’ve picked up a payroll service/software, you are now saving time and money. In the past you may have paid someone fulltime for payroll services, which is a perfectly acceptable alternative. However, this can still be a costly investment of time and money that doesn’t necessarily decrease the risk of payroll mistakes. Outsourcing payroll can save half of the cost of an in-house payroll manager. Also, with the help of an outside payroll service and software, you can ensure that all payroll taxes (income tax, social security, and Medicare) are properly handled by the time they are due. Additionally, periodic filings such as the quarterly form 941 will always be filed punctually and accurately. On top of this, all of your records will be kept organized and accessible.
A business owner’s most valuable asset is their employees, and sometimes they need last minute changes and adjustments to payroll. This is not a problem at Watkins & Company, as we often deal with last minute adjustments. With us, you can be certain a payroll accountant is just a phone call or email away. Call us at (601) 936-9288 to open your business up to more automation, better compliance, and increased savings.