LUTZ BUSINESS INSIGHTS
How to Choose the Right Payroll Method
LAUREN HARRIS, SENIOR ACCOUNTANT
Payroll is probably the most complicated element of accounting. You’re responsible to so many groups of people, like your employees, organizations that provide benefits, and taxing agencies. Mistakes can result in unhappy workers and/or penalties from the IRS – or worse.
If you’re processing payroll manually, every payroll run involves many details. You must calculate salaries and hourly wages, withholding, and payroll taxes, variables that can change from one period to the next. If you make an error, you sometimes have to retrace your steps to make sure that it didn’t affect a different area of your payroll.
There are options for your consideration. Here’s what’s available.
You’ve probably heard the names of some of the companies that provide outsourced processing of payroll. They’re good at what they do, but that’s often all they do. You provide all your payroll details to them at the start, and then report hours and any changes every pay period.
There is numerous software that support do-it-yourself payroll that’s designed for individuals who aren’t financial professionals. Setup is key to the success of this option. You then enter the same data you would give to a payroll service: your timesheet information and any changes in benefits and withholding, as well as any modifications of your payroll structure. The software completes the calculations required for paychecks, including your federal, state, and local payroll taxes.
Common features you might find here include:
- Payment by check or direct deposit,
- Off-schedule pay runs,
- Workers’ compensation support,
- Integration with accounting software,
- Payroll reports,
- Automatic payment of payroll taxes, and,
- Full-service payroll.
Working with a CPA
Both payroll services and DIY websites can save you a tremendous amount of time and better ensure the accuracy of your payroll. If you don’t have an accounting/payroll specialist on your staff and you’re trying to fit this task in with your other managerial duties, you may not feel confident with your current payroll procedures.
As you well know, payroll is one of the major elements of your finances. If you work with a CPA firm, it will first learn all it can about your company and how payroll fits in. CPAs are good troubleshooters; they can spot problems and suggest solutions in payroll as well as other areas that may be affecting payroll (and vice versa). Of course, they can also take over your payroll tasks should you want that.
Whether you’ve just hired your first employee or you’re unhappy with your current payroll method, consider the time, money, and knowledge required by another approach. Keep in mind, too, how devastating it can be if you have prepared the payroll incorrectly or if the respective taxes and reporting are not being handled. Let us know if we can help you determine the best solution for your company.
The added peace of mine will allow you to have more time to focus on your company’s operations, its short- and long-term goals. That attention can translate into improved productivity and profits.
ABOUT THE AUTHOR
LAUREN HARRIS + SENIOR ACCOUNTANT
Lauren Harris is a Senior Accountant in the Client Accounting Services department at Lutz with over two years of related experience. She provides payroll tax reporting and compliance, as well as outsourced accounting assistance to small businesses through QuickBooks support and training.
AREAS OF FOCUS
- QuickBooks Training & Support
- Outsourced Accounting
- Payroll Tax Reporting and Compliance
AFFILIATIONS AND CREDENTIALS
- Certified Public Accountant
- BSBA in Finance and Accounting, University of Nebraska, Omaha, NE
- Midwest YouCan Foundation, Treasurer
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