As an employer there are certain payroll responsibilities that are required by government agencies. These agencies can be federal, state or local. These responsibilities include withholding amounts from your employees compensation to cover income tax, social security, Medicare and other payments but it is not limited to these factors. So in other words we can say that payroll is the total amount of money paid by a business to its employees over a set amount of time. Also there are certain taxes that are levied by a government

agency on employees wages, tips, and other compensation. These are known as payroll taxes. The amounts withheld by employers from employees pay for federal income, social security and Medicare taxes are considered as trust fund taxes. So a business also has the responsibility of reporting and depositing payroll taxes to the appropriate agency in an accurate and timely manner. Late or inaccurate deposits may attract penalties and interest charges. So all these tasks for a small business can be a headache for the owner of the business. But first we would look into the concepts of payroll for a small business separately.

Payroll Concept:

For any company payroll is the sum of all financial records of salaries, wages, bonuses and deductions. Now for paying an employee for the services, which he has rendered, the employer issues a paper document, which is known as paycheck. While physical paychecks are commonly used in United States, recently the physical paycheck has been replaced by electronic direct deposit.

Now to access the paychecks an employee uses a card that looks like a bank debit card, which is known as a payroll card. A payroll card is much more convenient in using than a check casher because it can be used at participating ATM machines to withdraw cash, or in retail environments to make purchases. The payroll card account usually is held as a single account in the employers name. That account holds the payroll funds for all the employees using the payroll card system.

Small Business Meaning:

A small business is a business, which has a small number of employees. Though the legal definition of small varies from country to country, but generally the business, which has employees less than a hundred, is considered as a small business company. Small business is common in many countries, depending on the economic system in operation. Some examples of small business are small shops, hairdressers, lawyers, guesthouses etc.

Is Small business payroll service advisable

Handling payroll can be a headache for even the most meticulous and experienced human professional. So going for a payroll service becomes a necessity. But before going for a payroll service you need to check on certain things.

1. Making a right decision:- First of all we must try and find out whether a payroll service is right for our small business. Extremely small firms with a stable, salaried staff and minimal changes in tax obligations may well be better off processing internally because it would be more convenient and cost-effective. However this is not the case always as processing paychecks internally is not always cost-effective. It costs you the valuable hours of employee time every day plus expensive accounting software and training. In addition to this, the person who handles your payroll needs is liable to make mistakes if he doesnt have proper knowledge of payroll procedure and access to a sound payroll program. So payroll outsourcing can be an affordable and effective way to remove this burden. So in that case a small business payroll service can be timesaving and cost-effective alternative to internal processing. Using a small business payroll will also be helpful if you have to pay payroll taxes for multiple states.

2. Understanding the need:- Typically the small business payroll services handle a range of payroll tasks, which include, calculating paycheck and tax obligations for each employee, printing and delivering checks and providing management reports. Paychecks can be issued on a weekly, bi-weekly, monthly, semi-monthly or on a yearly basis. But there are some additional payroll services also which the small payroll services offer in return of some extra fees. These services include automatic check signatures, direct deposit and handling of W-2s. Now many services are also offering tie-ins with 401(k) and section 125 mutual fund plans, allowing employees to set up automatic deductions from their paychecks. Some small business payroll services also offer option of filing state and federal payroll taxes for the business. So as according to your needs youll select the services and pay the same.

Small business payroll software An alternative

Nowadays small business payroll softwares are continuously evolving and are becoming more and more user-friendly and more accurate. The usefulness of small business payroll software is measured in terms of its features and services. Though there are some problems of initial time lags in inputting data, the software minimizes it with its amazing speed of calculation. It also warns us if there are any multiple entries of same data.

Small business payroll software basically handles payroll and tax filings in small business establishments. It simplifies the tedious tasks of documenting, figuring and executing a payroll on a weekly, biweekly or monthly manner. This software saves time and manpower. Instead of using a separate manpower force in or having full time employees only for executing payrolls we can use this software and make use of the manpower source for some other uses. Now the cost of the payroll software depends on the payment duration, number of employees working, the state where the company is situated and the tax procedure followed by the state.

The features in the software may also vary a little bit due to the above said reasons. However this software is easily accessible as it is available easily in the market and can be purchased from the market or from an online service provider. Also many small business payroll software providers provide a free trail, which gives you a chance to use the software and to see whether it meets the needs of your company, or not. Apart from this there are many small business payroll software companies, which assure you service and up gradation for a definite period of time.