Entrepreneurship draws a certain kind of person, usually those attracted to the idea of being their own boss and growing something from small beginnings to a sizeable enterprise. The rewards can be substantial, but there are roadblocks along the way. A big one is the burden of managing payroll and staying compliant with ever-changing tax laws and regulations.
"Running accurate payroll is time-consuming, and getting it right can be tough," says John Cumbee, general manager of SurePayroll, a leading online payroll service for small businesses nationwide. "Even the most meticulous business owner is at risk of a miscalculation, a missed deadline, or overlooking a regulatory change." Any such misstep can result in penalties, fines, and unhappy employees.
Payroll administration is about a lot more than just handing out checks. A huge amount of data must be collected and managed to determine how someone should be paid, how benefits time is managed, how taxes are withheld and paid, and how compliance and reporting is conducted.
"There are many nuances to payroll reporting and compliance, which can be daunting when entrepreneurs are starting out," says Sean Cooper, director of partner management at SyncStream Solutions, a provider of health care and Equal Employment Opportunity Commission reporting and compliance software. "But there are technology solutions that can help reduce the burden."
Traditionally, the options available to owners of small and midsize businesses (SMBs) have been to take a do-it-yourself approach or to hire a full-service payroll provider. However, there are problems with both solutions.
"I think there's no question that trying to set up payroll themselves is not a good use of a business owner's time," says David Waring, co-founder of FitSmallBusiness.com, an online educational site for SMB owners. The biggest challenge is simply knowing how everything works; registering with the right agencies, filling out multiple forms for each employee, and meeting individual state compliance regulations, to name a few."
Full-service payroll providers take all that off the business owner's plate, but the cost can be prohibitive for a small company. Fortunately, a third option has emerged in recent years: payroll software solutions.
"SurePayroll marries the best of what payroll software and full-service offerings provide," Cumbee says. "Our customers maintain full control of their payrolls, while benefiting from award-winning live customer support and automated filing and payment of taxes."
Perhaps most important from a business owner's perspective, SurePayroll backs up its promises with a robust guarantee. IRS statistics show that roughly 40 percent of small businesses incur penalties averaging $845 a year. But if one of its customers receives a notice from the IRS or any other tax agency based on a filing that SurePayroll made, the company will work with the agency to help resolve the issue on the business's behalf. "And, if we are at fault, we'll pay all the associated penalties and fines," Cumbee emphasizes.
Some key areas to focus on when choosing a payroll services provider of any type are pricing, compliance, ease of use, and customer support, Waring says.
The best solutions offer businesses features like an easy-to-use payroll portal that allows them to input wage and hour data at an individual employee level and then preview and approve payroll on their schedule, from anywhere at any time, using any device. It's also important to look for a provider that maintains current tax rates and supports new and additional deductions as regulations are introduced; ideally, without any action on the part of the user, such as having to manually update software.
Finally, since growth is the goal of most SMBs, it's important to plan for it early. Choose a payroll services provider that will allow you to easily migrate to the right solution at each level of growth.