A payroll is a company’s list of its employees but the term is commonly used to refer to the following;
- The total amount of money that a company pays to its employees,
- A company’s records of its employees’ salaries and wages, bonuses, and withheld taxes or even,
- The company’s department that calculates and pays these.
Payroll in the sense of money paid to employees, it plays a major role in a company for several reasons.
- Payroll is crucial because payroll and payroll taxes considerably affect the net income of most companies and because they are subject to laws and regulations
- The payroll department is critical because employees are sensitive to payroll errors and irregularities, where good employee morale requires payroll to be paid timely and accurately.
- The primary mission of the payroll department is to ensure that all employees are paid accurately and timely with the correct withholdings and deductions and that the withholdings and deductions are remitted in a timely manner, which includes salary payments, tax withholdings, and deductions from paychecks.
Therefore, payroll is an area in which one does not want to take any risk because it leads to some financial and serious legal consequences. It is mandatory for all businesses to pay employees as per the government’s rules and regulations. But often SMEs believe that in the early days having a bank account for paying employees in a legal way is pointless. Employers can choose to use payroll software. One enters the time details on his/her own, and the software calculates the paychecks. More so one can then print the checks or send them via direct deposit. More details!
The following are some of significance of payroll service;
- It clarifies employees about their salary, leaves and deductions.
- Help SMEs to manage employees’ data efficiently.
- With this service, transferring salary and generating pay slip is easy with the convenience of a mouse click.
- Manage the company security and confidentiality.
- Generate employees’ related reports easily whenever required.
- It keeps record of employees’ leaves and salary.
In essence, there 3 types of payroll services are as below;
1. In-house payroll service
In-house payroll service is workable when the number of employees is very small or about less than 10 in a company. It this case, one has limited data to maintain and an employee can do that easily by using payroll software. However, the employee, who is responsible for payroll system, must be updated about the employee’s laws, salary norms, tax deductions and filing.
2. Bookkeepers and CPAs
Bookkeepers and CPAs are hired for outsourcing of payroll services. They therefore deliver accounting, tax, financial reporting, audit, and other economic services on paid basis.
3. Payroll Services
When one takes decision to hire a payroll service agency for their small business, it means he/she has a team of payroll experts who will assist in different tax and regulatory requirements whenever needed. They deliver accounting and administrative services including automatic deductions, employees’ in day-to-day expenses, direct deposits and many more.
The following are why payroll services are different from payroll software and why they are regarded as good option;
- Payroll service provider companies reduce the head count needed to manage this work in-house.
- As per the size of one’s company, one can select the services and make the payment accordingly.
- It protects one from the hassle and responsibility of retaining employees.
- The service also keeps one away from the harassment of payroll processing which needs to maintain the data of employees associated information for tax preparation and filing.
- Payroll service reduces the burden and one can focus easily in the other areas of their business.
- A payroll service keeps one in compliance with laws and best business services so that penalties and fines can be avoided.
- Payroll service helps in motivating employees with on time payment and compensation.
Click here for more information: https://www.investopedia.com/articles/personal-finance/122215/best-record-keeping-software-products-your-business.asp