New Services Can Bring Payroll And HR To Small Businesses
Depending on the size of the business, there are many approaches to payroll and HR needs in the small business world. Smaller business owners tend to handle payroll by printing checks and distributing them directly to the employees each pay period. Their record keeping tends to either be in their heads or written in a code language that only they understand. Larger businesses tend to outsource their payroll and HR needs so they are free to conduct their business without having to worry about those time consuming activities.
But both of these approaches are quickly becoming obsolete for many small and mid-size businesses as a result of electronic deposit and web-based features becoming more popular. Handling payroll directly with a pen and a ledger sheet has been a bad idea for a very long time. But outsourcing these services is also becoming less cost effective and less productive than moving them in house and taking advantage of new technology.
Randolph Johnston recently wrote and article for bMighty.com on this very subject. In it, he provides valuable information to any business owner who wants to be more efficient and cost effective in the payroll and HR functions of their business. Johnston works as Executive Vice President for KP Enterprises which is a technology consultant firm for accountants. Here is some of what he says–
Payroll systems have had more activity in the last five years than in the previous 10. The options for accounting and financial firms today are quite different than the options at the end of the last decade. Key providers are still in the market, but many new players have entered and may do a better job for your company and your clients than the alternative you’re using today.
So who are the key players now?
Accounting Software World has a comprehensive list, as does CPA Firm Technology.
But, strategically, you should think about payroll from several directions. There’s more to consider than the traditional approach of “there is too much risk — outsource it and forget it.”
Considerations include:
–Integration with human resources (HR)
–Activity/project/job costing allocations
–Web accessibility for employee/client self-service
–Multiple electronic deposits
–Confidentiality of the information
–Ability to handle different payroll conditions (bonuses, farm employees, 401(k), cafeteria plans)
–Cost per employee/company
Common Misconceptions About In-House Payroll Options
One misconception is that outsourcing payroll will take less time than processing payroll in-house. With today’s payroll systems providing electronic deposit and Web-enabled systems, and with the option of providing employees with debit cards to receive the funds, many companies can avoid writing checks completely. If you’re going to accumulate and enter the hours, the processing steps to complete the process aren’t complex, including the governmental filings and deposits. Some vendors, including CYMA, have the ability to process a large number of employees or companies at a flat cost. If you’re providing payroll as a service, you can often justify having your own in-house version of payroll software to generate large payrolls.
HR is another key system that should be integrated into payroll, but the offerings by traditional payroll providers may be difficult to use, expensive, not comprehensive, and not particularly effective. If you have 50 or more employees, you should look at using an HR system to accumulate key documentation on your people and to enable you to follow the labor laws more easily. You may have greater success with an in-house system integrated into payroll.
Good examples of products in this class include Sage Abra and Microsoft Dynamics GP for HR management.
Hosted Solutions for Smaller Companies
An area of greater expense today, however, is a company with a few employees. The in-house entry-level payroll fees continue to increase. While commonly less than $250, these systems routinely had no ongoing cost just a few years ago. Even with annual maintenance, compared with monthly costs of processing payroll, in-house processing can be a good option. However, small companies will have the most advantage of using a hosted solution like the offerings from PayCycle and Sage Payroll Services….
Perhaps now is the time for you to take a hard look at your payroll procedure — and save some money while doing so.
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