Managing payroll is easily one of the most delicate and tedious tasks required to run a small business because it needs to work accurately and on time every month. You need a reliable system that can.
- Calculate pay checks putting into consideration all applicable taxes, benefits, and other withholdings
- Track hours worked, vacation time, paid time off, and sick days
- Accurately factor in commissions, overtime pay, salary bonuses, and other aspects of employee compensation.
- Automatically send out direct deposits
- Stay up to date with state laws and company policies and ensure compliance.
Avoid payroll errors that can result in steep legal penalties and an increased employee turnover.
For this, many SMB owners and payroll managers choose to go with payroll software.
Here at Snow, our job is to make payroll easier for SMB owners and managers; therefore, we have compiled this guide to help you through the basics of setting up and managing payroll for your small business.
Let’s get started
How do I set up payroll for my small business?
Managing payroll will require you to research and get some details from your employees.
You will need to work out:
- Which position you are hiring and the compensation to offer for that position. You will also need to know
- Your pay schedule – whether you will be paying your employees weekly or monthly. Your payday needs to be before the end of the month to comply with state laws.
- Whether you will offer benefits such as a retirement plan and health insurance – and how much you will deduct
- How you will be paying your employees- either by direct deposit or bank cheque, cash, draft, credit transfer, or postal order
- How you will integrate a time tracking system to calculate hours worked, paid time off, overtime, and sick leave.
- How you will ensure compliance to all the relevant taxes for each pay cycle. As an employer in Ireland under the PAYE system, you have to deduct, report and pay employment taxes to Revenue on or before the pay date.
Once you have this down, you’ll need to compile a list of details from your employees during the onboarding process. Details such as banking information for direct deposits, information to include on your digital pay stubs. You’ll also need details to set up health insurance and retirement plans.
How to manage payroll for a small business using payroll software?
Many SMBs start by running payroll manually. A pen-and-paper payroll is affordable and offers a lot of insight into business expenditure. However, a manual payroll system carries inherent risks; if you make any errors when calculating and recording salary withholdings, deductions, overtime pay, paid time off, and so on by hand, you can face serious legal consequences down the road. Another downside of manually managing payroll for a small business is the large amount of time spent. For most SMB owners, a manual payroll system costs them several hours in each pay cycle.
As a result, you will inevitably need to consider using payroll software.
Choosing a payroll software solution
Payroll software solutions come with a range of plans ranging from basic to full-service. Your choice will depend on your needs and your budget.
A basic plan
For a basic plan, your payroll solution should offer:
- Integration with time tracking software
- Direct deposit, and
- Digital records
A basic plan may not look like much, but compared to a manual payroll system, it saves a lot of time and avoids errors. When you choose a basic plan, you will still have to be hands-on with managing your payroll; however, a basic plan will cost you much less than a full-service plan.
A full plan
A full-service plan will automate most of the processes involved in managing payroll for your small business. Your payroll software will automatically:
- Calculate and apply tax deductions,
- Calculate overtime pay and benefits
- Calculate and deduct payroll taxes
- Deduct insurance withholdings
- File tax reports to Revenue,
- Generate digital pay stubs,
- Send out direct deposits and more
The main benefit of an all-in-one payroll software plan is the ease of use and the low chance of generating errors. More importantly, a full-fledged payroll software solution is always updated with the latest employment tax laws, so your business will always be compliant.
Managing payroll for a small business using payroll software doesn’t have to be expensive, especially for a small business with a few employees. The learning curve is something to consider if you choose to go with a full plan. Mastering how to use your payroll software may take a bit of time, but most solutions come with tutorials and a full support team.
No matter which method you use to manage payroll for a small business, you will need to keep digital records of all your payroll expenses.
What are the benefits of using payroll software to manage payroll for a small business?
Running and managing the day-to-day activities of a small business can be overwhelming without considering payroll duties. Therefore, it is good to use payroll software to make this part of running your SMB easier. Here is what you stand to gain;
Reduced errors
Payroll errors can quickly translate to steep legal penalties, and your cash flow can take considerable time to recover from a costly fine. Payroll errors can also be in the form of underpaying and overpaying employees, both of which will hurt your business. Using payroll software will help you avoid making these mistakes.
Stay Compliant
Even for an experienced accountant, staying on top of ever-changing tax laws is tedious. You need a system that is always up to date with the latest changes to state and local tax laws to ensure compliance.
Time saved
Automating your payroll process will save you hours every pay cycle and leave you to focus on other areas of running your business.
Data security
Compared to outsourcing and manual payroll, using payroll software keeps your employee’s sensitive information safe in the cloud.
No need to hire accounting staff
Payroll software solutions are designed to be intuitive and easy to use. With a few tutorials, you can learn to use the software and save yourself the expense of hiring an accountant or bookkeeper.
Cost savings
Payroll software does not have to be expensive. There is a range of solutions in the market, and you can find a payroll software solution to suit your budget.
Quantum Payroll by Snow Technology
Quantum payroll makes use of the latest technology to provide an intuitive yet powerful payroll system perfect for small and medium sized businesses. We are happy to give you a demo so get in touch with us today.