Some of the major challenges that business owners with employees face include keeping up with constantly changing employment regulations, tax laws, payroll tax filing, and the hassle of managing employee operations. So when it comes to running a small or even medium-sized business, a cloud-based payroll solution can go a long way to easing the burden of employee administration.
For businesses with a small number of employees, running payroll in-house may appear to be the best approach, and so employers often choose to handle payroll functions themselves in an effort to save costs on outsourcing payroll functions.
However, this can take up a lot of valuable time while also running the risk of inaccuracy. Aside from the risk of miscalculation, it's easy for employers to run afoul of deadlines and regulations or lose track of updates/changes to laws. Such blunders can result in hefty fines, penalties, and an unhappy workforce.
In short, payroll is really hard to do manually.
Payroll for Small & Medium Businesses
Payroll management involves a lot more than computing wages and handing out checks at the end of every pay period. It's about driving the long-term success of your workforce and ensuring that everything is documented correctly. Payroll directly links to employee retention and attraction, employee engagement, and is a core ingredient in providing a positive employee experience.
When it comes to payroll in today's business world, an enormous amount of data must be collected, analyzed, and properly handled to ascertain how employees are to be paid, the amount of taxes to be withheld, how time off is managed, and to enable proper reporting and compliance to government regulations and payroll laws.
Payroll is no longer just understanding employee compensation and employee benefits. There are so many microscopic elements that make up modern payroll, and employers typically have two options in how to handle them. There is good, old-fashioned "do-it-yourself" (DIY) payroll, and there are modern, cloud-based payroll solutions.
Why DIY Payroll Is Not the Right Choice for your Business
Employers who take a DIY approach to payroll management end up wasting time that would be better spent on managing and growing their business. They also have to learn how everything works: filling out relevant forms for each employee, registering with various agencies, and meeting the compliance regulations of multiple states and jurisdictions.
Arriving at the amounts of withholding for each employee is a complex affair. Employers must continuously review employee W-4 forms to determine FICA taxes on wages, state withholding amount, and federal income tax withholding. All the while they must make sure that Social Security withholding is capped at the maximum for highly paid employees.
They must also keep track of reporting deadlines and accurately report pay payroll taxes (individual state payroll options, unemployment and workers compensation, FICA taxes, withholding, federal and state).
Is DIY payroll possible? The answer is yes, but is it practical?
The bottom line is, DIY payroll drags down your bottom line. The appeal of DIY payroll is to save costs, but ultimately employers burn away so much time on payroll that it ends up hurting the more important aspects of their business. Sure outsourcing payroll, or upgrading to a modern, cloud-based payroll solution costs money, but it gives employers more time to make money.
Payroll is an incredibly complex and ever-evolving field, and the best way to handle it is by using a modern, cloud-based payroll solution. More and more small and medium businesses are investing in payroll solutions to help increase accuracy and efficiency in paying employees, filing and calculating taxes, and complying with various payroll laws.
With major advancements in technology and the greater adoption of the cloud, business software is becoming increasingly available to small and medium businesses. These companies, as well as entrepreneurs, can enjoy enterprise-level software without coughing up the significant financial investments required to deploy and maintain costly hardware-based legacy solutions on-site.
This leaves business owners free to concentrate on more strategic tasks that will grow their business, expand the customer base, and drive increased ROI and better business outcomes. Again, you may spend more money by investing in more modern payroll solutions but you'll carve out more time, to make even more money for your business.
These solutions offer employers a cost-effective way to manage their payroll by providing intuitive, easy-to-use portals that allow the entry and computing of hourly wage data for individual employees. Business owners can review and approve payrolls anywhere, anytime, and from any device of their choice. The best payroll solutions automatically update tax rates and reflect changes as new regulations regarding deductions are introduced. Lastly, such solutions should be able to scale easily as the business grows.
Cloud-Based Payroll for Small & Medium Businesses
For businesses with a small number of employees, it may seem like the smartest and most cost-effective option to run payroll in-house. However, when the legal considerations, tax regulations, the risk of errors in reporting or filing taxes, and the actual time it takes to manage payroll are weighed, taking a DIY approach to payroll may not be the best option.
With a cloud payroll solution, small and medium business owners can automate and systematize payroll tasks to boost efficiency, accuracy and drive competitive advantage while freeing up their most valuable and non-renewable resource: time. To survive in the current business landscape, small business owners must be agile, innovative, and ensure that they have the right payroll solution in place for their small or medium businesses.
If you are an Arizona-based employer, or any employer looking for the right, modern, cloud-based payroll solution, then Inflection HR can help. If you have any questions regarding payroll processing, payroll compliance, or would like to see how we are already helping countless businesses with payroll, contact us today.