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Published October 31st, 2016 by

The Basics of Payroll Services: How it Works and How to Get Started

The Basics of Payroll Services: How it Works and How to Get Started

Payroll services are now changing because of new, innovative business practices and software. It is recommended to get a payroll services online software to increase your revenues by acquiring new payroll services for your newly hired employees or offer them to existing employees. This guide will let you know how payroll services works nowadays and how to get it started.

What is Payroll Services?

One quick payroll services definition is that it is a vital financial part of a business. Not only it is subjected to the laws and regulations of an area, it has a huge impact on the finances of a business. It is very important that the records of payroll services are accurate because of legal factors and you should have a record of it at all times. All you need to do is enter your employees’ data and it may provide the following services:

  1. Compute your employees’ gross pay.
  2. Submit electronic payments to IRS.
  3. Complete and submit forms for income tax reports (it may be local, federal or state tax forms)
  4. Compute your employees take home pay.
  5. Gives your employees their payment via checks or direct deposits.

Of course, each software has its own way of doing things. Some automatically send all electronic financial forms to IRS while some needs you to manually compute taxes. Calculations for state tax, local tax and other taxes also will depend on your location. Payroll services can be done on the cloud or as web-based interface. It can also be installed on your computer as a software.

What Do You Look For in a Payroll Service?

Not all payroll services are the same. They do not offer the same service or have the same features. These specific services are usually offered in the best payroll firms so look for them if you are considering buying one. These are:

  1. Of course, you want something that is cost efficient. Choose a service that fits your budget scheme. Find out if you need a contract and the other fees they might charge.
  1. You are dealing with money, so you want a service that has established a good track record. The company should have integrity. Payments should be made on time and are accurate.
  1. The types of features they offer should be aligned with your payroll needs.
  1. Accessibility and simple interface. The service should help you get things faster. It should not be complicated that you are unable to use them. The convenience of accessing it, finding out what you quickly need, and running your payroll data in just a few minutes are some of the great things you can have in the service.
  1. They have 24/7 customer support. It is ideal that the service has a 24/7 support group just in case you encounter any issues along the way. Find out how they can be contacted and if they have a specific person that you can rely on.
  1. No matter how advanced a software is, you still need to regularly do updates or follow maintenance schedules. Sometimes technical issues do happen that are way beyond their control. Check to see if they have any backup plans if this happens.
  1. If you are running other programs such as CRM (Customer Relationship Management) software or other time and attendance software, it is important that you can integrate payroll services, synchronize their data to other resources that you have.
  1. The features they offer should be scaled down to fit your payroll requirements.
  1. Additional value added services such as self-service options and worker’s compensation.

Requirements for Payroll Reporting

Aside from calculating the taxes, a payroll firm should also fulfill the requirements of IRS by submitting forms and/or payments. Some of the forms include the following:

  1. Form W-2 or Wage and Tax Statements
  2. Form 945 or the Annual Return of Withheld Federal Income Tax
  3. Form 941 or the Employer’s Quarterly payroll tax return
  4. Form 940 or Form 940EZ, also called the Annual federal unemployment tax return.

Having a payroll service gives your employees view their payroll information. They can dispute the charges real-time if an error has been made and it can be corrected immediately. Getting a payroll firm is a popular choice for large or small businesses because of these features. Do not forget that when you are buying payroll service, it should save you time and be proficient as possible.

How Do You Set Up Your Payroll Services at Your Office?

Whether you are a small or large business owner, no matter what type of payroll services provider you have, the way you set up a payroll system follows the same steps. According to SBA.gov, there are 10 steps on how to set up your payroll services. Following these steps can help you avoid any IRS (Internal Revenue Services) penalties and saves you time. These steps are:

  1. Acquire an EIN (Employer Identification Number). Even before you hire any employees, you need to obtain an EIN from the IRS agency. This is needed in order for you to report any tax or financial documents to IRS. This can be done online or you can contact IRS directly.
  1. Find out if you need any state or local IDs. Depending on your location, your local or state government may require your business to obtain state or local IDs so that you can process your taxes.
  1. Determine if the one you’ve hired is classified as an employee or an independent contractor. The difference between the two will affect on how you pay your taxes.
  1. Check your employee’s paperwork. Every new hired employee must fill and submit their Federal Income Tax Withholding Form, also called the W-4. Before they submit, make sure everything has been filled up and all the information is correct.
  1. Set on a pay period. Find out which payment schedule is easy for you to follow. The time period can be bi-monthly, weekly or every month. Just remember that even if your employee was not able to work the whole period, you still need to withhold income tax in IRS.
  1. Carefully record everything about your employee payment terms. Include any contributions such as retirement or health care plans if needed.
  1. Select your payroll service. Each service has its own specialization so it’s best if you pay attention to it. Make sure that they are responsible for all your payroll tax reporting and are able to pay your employees on time.
  1. Execute your payroll system. Start running your payroll services once it has all the information it needs.
  1. Keep a records of your payroll. It is best to keep a record of it for a specific time frame. Make sure that the records are kept confidential and there are security measures implemented.
  1. Report your payroll taxes. Submit to the tax authorizes all the payroll reports you’ve done It can be done on an annual or quarterly basis. If you are unsure on when to submit or do reports, check out the IRS’s Employer’s Tax Guide.

Payroll services can be painstakingly hard to do. It can be very burdensome if you own a small business. If you have the software, it will help you focus on other tasks such as customer service or product development Using payroll services for accountants is ideal, but you can also use it even if you’re not one because the software will be able to guide you on what to do.

You Have The Choice to Choose

As an employer, you can have the option to handle your payroll services in three ways. The options you can consider are:

  1. You can handle it in-house or using the company’s accountant.
  2. You can outsource your payroll to a firm and separate the accounting part to a different provider.
  3. You can outsource your payroll and accounting to just one firm.

If you are going to outsource, choose best payroll firms that is aligned with your payroll practices.  They should be able to compute the taxes and are familiar with the laws governed by IRS or other tax authorities.

Payroll is the biggest expense for many companies. It may be difficult to find the best payroll service for you. However, if you dedicate a bit of effort in finding the right payroll services software, it can save you money and time spent in calculating payroll.

Develop and improve your payroll services in your company by getting a software that will lessen your administrative costs. It should also provide end-to-end processes to provide your employees their salary and offer transparency to payroll reports. Additionally, you need to lower down the error rates in accounting or in other financial employee reports. If you want to give the best to your employees regarding their payroll, read on reviews of payroll firms  at CrowdReviews.com and you don’t have to worry about them not being paid on time and lessen pay disputes.

Our rankings are completely independent, transparent, and community driven; they are based on user reviews and client sentiment. These payroll services companies had to earn their way up and didn't just pay their way up.

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