One of the biggest challenges that most of the business owners face these days is properly managing the payroll of their employees. This is so because the process of payroll calculation is such a delicate process and is prone to a lot of mistakes. This doesn’t end here. But a lot of businesses face penalties every year due to the mistakes in their payroll calculations. Your employees would also not appreciate those mistakes in the long term.
If you’re also facing the same problem, you can try a fully automatic Pennsylvania Payroll Calculator to fully automate the process and eradicate the possibility of human errors.
Doing A Payroll
When you’re taking new employees onboard, you should already have a well-developed payroll software to calculate their taxes and make their net payments quickly without any hassle. Luckily, advancements in computer science have led to the invention of payroll software, and now you can do the payrolls of all the employees in just a few clicks. So, now all you need is the right payroll software.
But software isn’t the only way of doing payroll, here are the three possible methods of doing payroll.
- Manually doing the payroll
- Hiring am an accountant to do the payroll
- Investing in a payroll software
The Manual Way Of Doing The Payroll
In the manual way of doing the payroll, you’ll have to include every employee in your payroll net after hiring them for the first time. The manual way is the most complex, but in return, it saves you the money that you’ll otherwise have to pay to the payroll software providers. In the manual payroll system, you’ll need to make sure that you are well aware of all the federal tax and state-based tax requirements before calculating the net pay of your employees.
Here are the steps you’ll have to take when you do the payroll manually.
- First of all, you’ll have to get all the appropriate tax details of your employees like their EIN, tax rates and other required information.
- After collecting the basic tax information of your employees, you’ll have to ask them to fill out the federal and state tax withholding forms like W-4. These forms must be filled and signed by the employees themselves.
- Now comes the most complex and error-prone step, actually calculating the total taxes of every single employee that you’ll be needed to withhold. You must not do any mistakes in this step, or else you might face fines and penalties by IRS.
- The next step is paying your employees, make sure that you use the legally sound means of paying them.
- You’ll have to pay and file the taxes by yourself too.
Hiring An Accountant
Many business owners are now skipping the manual payroll system and are now hiring accountants to do their payroll. An accountant isn’t only responsible for the payroll calculation of your business, but they can also take care of the rest of the financial aspects of your business as well.
You can take good financial advice from your accountant on the financial matters that concern you. One thing to take care of when hiring an accountant is that they must have experience of working in relevant businesses.
Here are the benefits of hiring an accountant for payroll calculation.
- It helps you avoid late fees.
- You’ll have to spend almost no time on the payroll by yourself.
- The errors are minimized.
- Better security of your financial data.
- Fewer mistakes mean that your employees will have enough time to spend on constructive tasks.
- An accountant can also help you get access to some great financial predictions, and you can alter your business operations accordingly to maximize your business growth.
Investing In A Payroll Software
In terms of the costs, this method lies between doing the payroll by yourself and hiring an accountant to do it. But in terms of popularity, it is the highest. Investing in a payroll software helps you get immense control over all the available financial information of every employee, and also eliminates the possibility of any errors. You can choose any of the most popular payroll software that fits your needs and hire their services to fully automate the payroll system of your business.
Here is what you should be looking for in payroll software.
- The software should be regularly updated to keep up with the ever-changing tax laws. This is an important feature, ignoring which can earn you penalties from the IRS.
- The software should be able to calculate the actual amount to be paid to every single one of your employees. The calculations should be free of any critical errors.
- The payroll software you’re going to use should be able to get integrated with other systems like the employee management system and the HR.