Are You Paying Too Much for Payroll Services?

By Gail Doby, ASID
CVO & Co-Founder, Gail Doby Coaching & Consulting & Design Success University

If you have employees, even just one, and are not using a payroll service, you should be.  Even if you are using a program like QuickBooks to track payroll data, unless you have a background in accounting and are conscientious about keeping up with all the changes in the tax laws, you likely at some point will commit an error or fail to comply with requirements, and that will end up costing you in fees and penalties.  How likely?  I was surprised to learn recently that the IRS penalizes about one out of every three businesses for payroll errors. Those are not good odds.

Besides the potential liability, processing payroll is a headache and takes up valuable time you could be spending on making money to offset those taxes.  These days you can choose from a number of reputable online services that offer affordable options for any size business. (Do a web search on “payroll services” to find more information and rankings by consumer help sites.) You simply upload your data from QuickBooks or whatever office management program you are using, and they do the rest.  Basic services include paying employees (via check or direct deposit), paying your federal and state taxes (income, FICA, etc.), and filing your payroll tax forms at the end of the year. They also will process W-2, 1099 and W-4 forms and the paperwork for compliance with the Affordable Care Act, if that applies to your firm.  Some also offer other human resource services, such as workers compensation insurance and processing new employees.  If you are uncomfortable using an online provider, local services are readily available as well.

The cost for basic online payroll services can run roughly between $40 to $100 a month, depending on what’s included and the level of customer support provided. It is definitely worthwhile to spend some time researching providers, as you could end up paying for a lot more service than you’ll ever need or having to pay extra charges for services not included in a basic plan. Start by making a list of the services your firm requires, then check out the rating sites to see who offers what at what price. Be sure to check if they are bundling services you don’t need. You also want to take into account reliability and the security of your data.  Another important item is how much tax the provider will withhold, when and for how long, as that can affect your firm’s cash flow.  Finally, inquire about their customer service and technical support.

You need to invest a bit of time up front, but once you’ve selected your provider and set up your account, you’re to go.  Now, think what you can do with the extra time to make your business grow.

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