A lot of business owners aren't experts in accounting or
have training or experience in running their own payroll. Payroll processing
can be challenging and confusing to small business owners, and the fact that
the IRS can impose penalties if not filed correctly makes payroll processing
somewhat intimidating. Because of this, most small business owners leave
payroll processing to experts -either by outsourcing payroll, or processing it
in-house (also known as traditional payroll).
1. Outsourcing Your Payroll is More Cost Effective
If a business owner uses a certified public accountant (CPA)
to perform in-house payroll processing, costs could be anywhere between $260
and $480 per payroll run -not per month, but each time payroll is run.
For in-house payroll processing, using a CPA is the best way
for having your payroll done correctly because certified public accountants are
specially trained in accounting and payroll procedures. However, certified
public accountants charge between $65 and $120 per hour and at approximately 4
hours per payroll processing run, the cost can be quite substantial. And if
your business runs payroll bi-weekly or weekly, you'll double or even quadruple
this amount. Even without a business degree, everyone knows that the lower your
expenses are, the quicker you can become a profitable owner.
Outsourcing your payroll can give you all the benefits and
accuracy of having a CPA do your payroll, but will run you at a fraction of the
cost. It's the best of both worlds; easy, accurate, and cost effective.
Outsourced payroll can save you thousands of dollars per year.
So how much can you really save? Let's compare how much it
would cost for Small Business Inc. to run payroll for its four employees once a
month. Just to be conservative, we'll use $65 per hour to estimate the
traditional in-house payroll cost --the low end per hour cost for a CPA.
Outsourced Payroll
Base price of $44.95 per payroll run + $1.85 per employee =
$52.35
[$44.95 + ($1.85 x 4)]
Traditional In-house Payroll
Four hours at $65 per hour = $260
Outsourcing payroll saves Small Business Inc. $207.65 per
month.
2. Outsourced Payroll Helps Small Business Owners Avoid IRS
Penalties
So what happens if you can't afford a CPA and you decide to
try your hand at calculating, paying, and filings your own small business
payroll? Because of the complexity and ever changing payroll laws, it's easy to
make mistakes.
Each year, approximately 40% of small business owners are
penalized by the IRS for paying or filing their payroll taxes incorrectly.
That's a pretty high percentage, and at approximately $850 a year in penalties,
doing your own small business payroll processing might not be as cost effective
as if you had a specialist do it for you. Payroll outsourcing companies such as
Online Business Payroll automatically calculates, pays, and files your small
business payroll taxes for you. Because of the automated process, you'll never
be late or miss a payment or filing.
3. Outsourced Payroll is Easy
Payroll processing done through an outsourced small business
payroll service is easy to use. Although setting up your employees could take a
few minutes, the actual payroll run can be done in just a few minutes.
Just log into your outsourced payroll service's secure
online portal and enter in the hours each employee worked during the pay
period. After you enter in your employees' hours, review the information, and
click submit. Your payroll is done.
4. Outsourced Payroll Takes Care of W-2 and 1099 Forms for
You
At the end of the year, small business owners must give
their employees either a W-2 form or a 1099 form by January 31st of the
following year. W-2s are forms that let employees know how much money they
earned as well as how much federal, state, and local taxes were withheld during
the year. Form 1099 is for independent contractors who you paid more than $600 to
during the year.
Not only do you need to give these forms to your employees
and independent contractors, but you also have to file certain forms with the
IRS. Again, if you don't know what you're doing, this could cost you in IRS
penalties.
Outsourced payroll companies keep track of this information
and file it for you. At paperless companies such as Online Business Payroll,
small business owners can print W-2s and 1099 forms for their employees right
on the spot. Small business owners are able to get tax forms to their employees
faster by being able to print these documents for them, rather than employees
waiting for their tax forms to arrive in the mail.
5. Outsourcing Payroll Services Let You Maintain Control
Most outsource payroll services, allow you to maintain
control over your payroll while taking care of the tough payroll tax
calculations in the background. Outsourcing your payroll is a beneficial
relationship because it allows you to stay in compliance with tax laws, but
also allows you to focus on your business instead of trying to become an expert
in payroll processing.
Entering your payroll information online allows for you to
maintain control of your payroll processing and helps eliminate double entries
or typing mistakes often associated with calling or faxing in your payroll
information to a customer representative. You enter it, you review it, you
approve it --you're always in control of your small business payroll
processing.
6. First Month Free
The best thing about using an outsourced payroll service is
a lot of companies allow you to try their service for free. You have nothing to
lose, why not give outsourcing a try. Visit http://edelweisspayroll.ch/
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