With so many tools available, it can be difficult to find what works for your business. In this section, we break down some helpful tools so you can find the one most compatible with your business.
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Payroll is an often underestimated chore for business owners.
Setting up the correct payroll system—one that helps organize records–can make it easier to maintain correct and timely payroll distributions.
When it comes to payroll, there are many factors to consider. Here are a few common payroll mistakes:
- Employee classification: It's important for both you and your employees that the employee is classified correctly. It will affect both of you. The correct classification has important ramifications, including the potential for retroactive tax implications.
- Sending tax forms: It’s also important that you send the correct tax forms to your employees and contractors at the end of the year. They need this information to pay their taxes appropriately.
- Correct calculation of wages: By law, employers are required to pay employees for the hours worked. Correct calculation of wages is important for tax purposes in addition to the business following laws regarding wages. This includes paying the correct regular, overtime, and holiday pay rate.
- Making the appropriate deductions: If applicable, you or your payroll system should account for deductions, such as taxes, employee retirement contributions, and benefits.
- Making payments on time: There are rules that regulate payment timeliness, and it’s also something that your workers expect. Staying organized in this area is important.
- Keeping payroll records: It’s important to keep records in the case of an audit, a complaint, or a mistake. Different states also generally have a rule about for how long you must maintain payroll records.
A payroll service can streamline the process and help you eliminate errors. Here are a few common features from payroll services:
- Automation: Several services automatically process payroll, issue and file W-2s and 1099s, and file taxes at the local, state, and federal levels.
- Number of payment options: Payroll services generally provide a number of payment options for your employees, including direct deposit.
- New hire reporting: On your behalf, many payroll tools will report new hires to federal and state governments.
- Ease of integration: Many work with third-party services, such as accounting and bookkeeping software.
- Payroll reports: This can give you an overview of payroll history, contractor payments, tax payments, paid time off, and more.
- Paid-time-off management: Though not every payroll service offers this feature, many help you track and manage vacation and sick balances for employees.
- Employee self-service: Employees can access pay stubs, tax forms, and more.
- Mobile and web apps: Employers and employees can access payroll information on mobile and web apps.