Payroll is an important part of running a small business with employees, and getting it right is a key piece of your business’s financial success. The payroll process needs to be accurate or a business can face serious consequences, from inaccurate financials to unhappy employees and even inquiries from the Internal Revenue Service (IRS).
Payroll services, including online cloud-based software, can be both affordable and easy to use for small business owners. A payroll service can help you save time, reduce errors, and support accurate and timely payments to employees. Browse payroll services in our marketplace, or get personalized options when you sign up for a free Nav account.
A payroll service helps a business manage the process of paying employees, including withholding taxes, paying bonuses, commissions or tips, and withholding deductions for taxes, retirement plans, health insurance, or other benefits. It may also help employers file state and federal payroll taxes on time.
A payroll service may offer a completely outsourced solution that manages payroll for the employer, or payroll software to make it easier for the employer to administer payroll themselves. Some services offer a combination of self-service software with additional support as needed.
Most payroll software today is cloud-based, which means you can run payroll from anywhere. Many software programs offer mobile apps that make it easy for employers to manage payroll, and for employees to update their information and view pay stubs.
Payroll is often one of the largest and most important expense a small business needs to manage. It’s also a legal obligation. You need to pay your employees accurately and on time, not only so they stick around, but also to meet state and federal labor requirements. Even if you only pay yourself a salary, it’s important to handle payroll carefully and in accordance with applicable requirements.
Payroll mistakes can be costly. For example, a small business can be penalized for every W-2 form it fails to send out on time. And payroll tax payments need to be paid on time — neglecting to pay them can result in serious penalties. A payroll service can help you save time, reduce errors, and support compliance.
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A payroll service helps a business manage the process of paying employees, including withholding taxes, paying bonuses, commissions or tips, and withholding deductions for taxes, retirement plans, health insurance or other benefits. It may also help employers file state and federal payroll taxes on time.
You’ll need to look for a payroll company that meets the unique needs of your business. Consider how many employees you need to pay, and how they are paid: salary, hourly, overtime, bonuses, tips, commissions, vacation pay, sick leave, etc.
If you have a lot of part-time employees, for example, you’ll likely need a payroll service with strong time-tracking features. If you have tipped employees, you may want a service that tracks and imports tips, or at least integrates with one that does. The more information you need to input manually, the more time payroll can take to complete. And manual processes can often lead to mistakes.
Also think about how you expect your payroll needs to evolve. For example, a very small business with just a few salaried employees will likely have very different needs from a food truck that hopes to expand to multiple trucks. And a business that lets employees work remotely from anywhere will likely have different payroll needs than one where all employees live and work within one state.
If your business pays payroll, you should have some kind of payroll solution. Running your own payroll manually can result in costly mistakes. Payroll software is often a cost-effective solution for even the smallest businesses.
You have multiple options to consider when it comes to choosing a payroll service. There are low-cost and even free payroll software for businesses with few employees.
There’s no single best solution for every business; the options we’ve shared above can give you plenty of solid choices to consider based on your needs.
Sole proprietorships and single-member LLCs don’t necessarily need an employer identification number (EIN), but a payroll service provider will often require one to properly report withholding to the IRS. You can get an EIN from the IRS for free, and it can help separate your business and personal finances.
A Professional Employer Organization (PEO) is a full-service HR outsourcing solution that some small businesses use to help manage payroll, maintain workers’ compensation insurance, administer employee benefits and to outsource other human resource tasks. Pricing varies; some charge per employee and others as a percentage of payroll.
If you decide to use a PEO, it’s a good idea to choose a PEO that is certified by the IRS. This is a voluntary certification that the IRS grants to PEOs that become certified as a Certified Professional Employer Organization (CPEO). Becoming and remaining certified as a CPEO means that a PEO has met specific requirements related to background, experience, business location, financial reporting, tax compliance, and bonding requirements. The IRS can’t help you choose a PEO but it can help you narrow your choices.
Payroll is the process of paying employees — including wages or salaries, bonuses, commissions or tips — and withholding deductions for taxes, retirement plans, health insurance, or other benefits.
Learn more about payroll.
A payroll service helps a business manage the process of paying employees and managing withholdings for taxes and employee benefits. It also helps employers file state and federal payroll taxes on time.
A payroll service may offer a completely outsourced solution that manages payroll for the employer, or payroll software to make it easier for the employer to administer payroll themselves. Some services offer a combination of self-service software with additional support as needed.
Learn more about payroll services.
Payroll software is designed for small and medium-sized business owners who don’t have human resources or payroll experience to help them easily and quickly process payroll. Most payroll software is software-as-a-service (SaaS), which means you access it via the cloud and pay for it as you need it, usually with a monthly fee or other subscription.
Learn more about payroll software.
A Professional Employer Organization (PEO) is a full-service HR outsourcing solution that some small businesses use to help manage payroll, maintain workers’ compensation insurance, administer employee benefits, and to outsource other human resources tasks. Pricing varies; some charge per employee and others as a percentage of payroll.
Learn more about Professional Employer Organizations.
An independent contractor is an individual that a business hires via contract to perform work or duties for the business. They are typically self-employed individuals or freelancers who may work on a part-time basis for the company
Learn more about independent contractors.
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