Three Options for Small Business Payroll

When starting a new business it is very easy to forget, during the budgeting stage, one of the most important costs a company will accrue. At the heart of every business, perhaps even more so than the services provided and products sold, are the people who undertake the day to day running of the operation. Without staff in place it would be impossible for a business to operate and as such it is imperative for these people to be kept in high morale. This means paying them correctly and on time, something which is far more difficult than could be initially envisioned particularly for a growing or expanding company.

Payroll Options for the Small Business

A company has a number of options with regards to how it conducts its payroll and payment of its staff. These can be roughly divided into three areas, each with their pros and cons, and can be listed as – hiring a third party provider, in-house manual payroll maintenance or utilizing an in-house software system.

Hiring a Third Party Service

In hiring a third party service provider the company doing so will have to provide an on-going monthly fee for the payroll aspect of their business to be managed. For many a start-up company this is, quite frankly, a long term expenditure which budget may not allow for. Although third party providers are, of course, specialists in their field and thus are likely to ensure high levels of accuracy and obedience towards any legal requirements in their payroll services they also can constitute quite a fiscal drain if a company does not have large amounts of surplus money.

In House Payroll

Maintaining payroll in-house via manual means can also prove somewhat tricky on a couple of levels. Whilst this option would save the monthly fee that a third party provider would necessitate, or the investment fee required for payroll software, there are many obstacles that this option could potentially provide.

Firstly, keeping up to date with all the latest facts, figures and changes to regulations can prove burdensome; inability to correctly complete and return end of year taxes, of which payroll expenditures would constitute a fair amount,  can result in huge fines. By not having a professional on the books mistakes are very easily made and the fines can quickly overtake, on a fiscal level, the amount required to pay for a service provider or software package. This can cause whoever is allocated to look after payroll a great deal of stress particularly if they have other areas of business to get on with. Hiring a full time member of staff solely to look after payroll would also prove far more expensive than either of the other two options available.

Payroll Software

The final option is investing in payroll software. Whilst the initial costs for this programming would indeed be more expensive than manual payroll maintenance the investment could, in time, prove the cheapest. The potential for human errors are widely eliminated through the introduction of software and can prove speedier than manual completion of a payroll form. Similarly, access to details could be achieved quicker through a centralised database that software can create – manual payroll completion requires copious amounts of cumbersome and hard to sift through paperwork and out sourcing payroll means that access to files cannot be achieved with immediacy.

The time that payroll software can save a company completing payroll is vital; in the business world time means money and the quicker the process can be undertaken the longer can be spent on more productive areas in the company. Whilst an essential part of any business is, as established, the payroll this is also an area that will never turn a profit. In utilising software to cut time spent on payroll a company is cutting the time spent on non-profit making areas and will thus help improve its bottom line.

About the Author: Kieron Casey is a BA (Hons) Journalism graduate who blogs regularly on a number of topics including small business advice, payroll and small business software.

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