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Choosing the right payroll system for your business is a little more complicated than many people realize. Depending on where your company is based, there is a need to comply with specific governmental regulations that relate to record keeping, as well as managing the calculation of wages and the withholding of taxes in a manner that is in compliance with those regulations. There are also other features that you may find helpful with your payroll system and the level of service and support that it provides to your employees.
The size of your business is often a key factor when it comes to choosing the best payroll system. Today, there are open source software packages that are designed specifically for use by smaller companies, with some of these packages including basic payroll software. Packages like these are ideal for someone who employs only a few people, and needs basic help in calculating basic pay, overtime, and keeping up with personal, sick, and vacation days with relative ease. Most of these open source packages can also interface with revenue agencies at national and state levels, making it easy to keep up with any tax changes that impact withholding or the calculation of business taxes.
For situations in which a payroll management system should provide more than the basics, it’s a good idea to determine what additional features would be helpful. For example, you may want a payroll system that has the capability of printing payroll checks, or possibly even managing the direct deposit option, if you offer that service to your employees. Another benefit of a more advanced system is the ability to automatically prepare revenue forms on a monthly basis that can be printed and mailed to state and national revenue agencies. A payroll system of this type can minimize the number of hours needed to manage these functions, making it possible to divert those resources to other aspects of the business.
Whether basic or a more comprehensive payroll system is desired, there are a few core aspects that must always be considered. One of those aspects is security. The system must come with protocols that make it possible to limit access to payroll data. Some systems take what is known as a cafeteria approach, in that each authorized user is granted specific access rights to particular information contained in the payroll database, but not to other types of data found in the system. Along with day to day security, the best payroll system solutions will also have data recovery options available, which can come in handy in the event of a disaster or corruption to the main database.
The best payroll system options will also be somewhat flexible, in that adding employees or rearranging existing employees into new departmental groupings is easily managed. If a given system is likely to be outgrown in a year or two, it probably is not worth your time or money. Go with something you can use over the long term, even if your business grows by leaps and bounds.
Keep in mind that you can always choose to outsource the payroll, which eliminates the need to maintain a payroll system in house. If this is a viable option, make sure the service will prepare all the necessary forms, routinely updates its formulas to reflect current taxation and withholding laws, and is capable of allowing you access to your payroll records whenever you need them. Today, there are many partners who provide this type of service at rates that even smaller companies will find attractive.