Calculating payroll taxes, computing employee deductions, writing checks — a payroll system can be tedious and time-consuming. That's why, traditionally, business owners have hired payroll services to handle the chore for them. These days, however, a growing number of business owners are opting to tackle the task with easy-to-use payroll software programs. Payroll solutions generally include some combination of the following features:
- Ease of use for someone without bookkeeping experience
- Calculate employee earnings and deductions
- Deduct federal, state, and local payroll taxes in accordance with the laws
- Print payroll checks
- Prepare and print related tax forms, such as W-2s
- Generate reports and keep IRS-required records
- Enable electronic direct deposits to employee bank accounts (optional)
Consider an accounting suite with a payroll solutionMany popular accounting programs include basic payroll software; others require you to purchase an add-in module.
Compare stand-alone payroll software programsA separate payroll software program may suit your needs better than a component of an accounting suite. In general, stand-alone programs are cheaper than full accounting suites and may offer more of the features you want. In many cases, files from these payroll software programs can often be imported into popular accounting programs.
Sync up with your accountantIt may be wise to choose the same software used by your accountant. This enables your accountant to import your payroll software files in a snap, which can save time auditing your books and preparing your taxes. And that saves you money.
Get help with payroll softwareSometimes, even the simplest small business payroll software program can leave you scratching your head. If you run into problems or questions, check the manufacturer's Web site for FAQs and customer support.
- Expect to pay an annual fee to update the tax tables in your payroll software.
- Some payroll solutions may require you to purchase checks from the software manufacturer.
- Look for payroll software that is targeted to a business your size, and will work if your payroll grows.