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Why do some businesses choose a payroll service versus software or doing payroll by hand? The answer is very business dependent.
Doing payroll by hand is the riskiest of options. Why? Payroll laws and tax rates are constantly changing, making for a very meticulous process to run just a single payroll, much less keep a tab on deductions, withholdings, payroll state and federal taxes on time, and submitting all the information necessary on your W-2s, 1099s, and 940s. Calculating payroll by hand also puts you at much higher risk for human error which the IRS isn’t so accommodating about. Not to mention, you are trying to run a business which takes plenty of time and attention in itself. Keeping up with the laws and tax rates and running payroll should not take up much of your precious time unless that is your core business!
Payroll Software is a popular solution. Why? In general, most payroll software keeps you up with the tax rates and laws for you so you can run accurate payrolls with ease. Many also have features to run important tax forms like W-2s, W-3s, 940s, 941s, 1099s, and 1096s. Payroll software is a good tool to make payroll by hand less likely to be victim to human error, although you still need decent knowledge of payroll and payroll law. You still have to make sure you set up things correctly, send in forms on time, and check for human error.
Finally, Payroll Services. Payroll Services are going to be the most expensive option but also include a lot of things that DIY or Software don’t include. Typically, after going through a set up process, you would then only need to submit employee hours and notify the payroll service company of changes to your company and they take care of the rest. Most even guarantee accuracy and timeliness for your payroll and taxes. Seeming how IRS penalties are steep, this justifies the additional cost in many employers’ eyes. Pricing structure is usually a base fee per payroll run, a per-employee fee, plus add-ons (like filing W-2s, bonuses, etc). After adding up what features you need, plus the time it would take you to figure out everyone’s payroll, many employers find a payroll service quite affordable.
Ultimately, the decision between payroll software and payroll service comes down to time, money, and how hands-on you want to be with your payroll for your company. CheckMark offers both a comprehensive and all-inclusive Payroll Software as well as customizable Payroll Services.