For a small business with a limited number of in-house resources, payroll requirements can be a major challenge.
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But it's a challenge that needs to be met with a reliable solution – drop the ball on payroll and you'll have both your workers and the government breathing down your neck.
In the past, small business employers typically designated an in-house staff member to handle all of the company's payroll needs. Although some companies continue to manage payroll using paper forms and in-house personnel, most have transitioned to solutions that take advantage of modern technology and/or the growing list of small business service providers.
You will ultimately have to decide for yourself which payroll method is most capable of meeting your company's needs and business requirements. Here are some of the factors you'll need to take into consideration regarding payroll management in your small business.
- In-house. Many experts advise small, inexperienced business owners to avoid tackling payroll requirements using their own, in-house resources. But for those who are brave enough to give in-house payroll a shot, a first-rate payroll software application is a necessity. Payroll software solutions give you full control over payroll processing and tax filing, and can be a cost-effective alternative to a third-party providers.
- Payroll services provider. It is very common for small businesses to outsource their payroll requirements to a payroll service provider. Payroll service providers handle the entire process, including the reporting and recordkeeping requirements that vex many in-house payroll systems.
- Cost. Cost is always a consideration when it comes to payroll management. Although a payroll service provider may seem like the costliest option, you may find in-house payroll management is more expensive – especially when you consider the amount of time your staff spends on payroll-related activities.
- Security. Whether you outsource payroll or manage it in-house, security has to be one of your top priorities. It is absolutely critical to ensure that the assets you use to record and archive payroll are truly capable of protecting your employees' sensitive information.
- Time investment. Small workplaces often spend 20 hours or more a month on in-house payroll. If that isn't acceptable, you'll want to focus your efforts on finding a payroll service provider that meets your expectations.