“Payroll is simply the sum total of all compensation a business must pay to its employees for a set period of time or on a given date. Payroll can also refer to the list of employees of a business and the amount of compensation due to each of them.” It is usually managed by the accounting department of a business however, in the case of small-business, payrolls may be handled directly by the owner or an associate. It is often observed in the case of SMEs or startups that they tend to avoid hiring payroll services especially in the initial days of their establishment as they find adhering to legal ways pointless, not realizing that this may lead to dire consequences in long run during audits of the company accounts.
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Hence, it is mandatory to abide by government rules and regulations while making payments to employees which is well-known to professional payroll service providers. There are 3 types of payroll services that you as an entrepreneur must be aware of:
Three Types Of Payroll Systems
1. In-house Payroll Services
In case the employee strength of your company is less than 10, then you can go for in-house payroll service as it is both workable and cost-effective. A company with less than 10 employee requires less maintenance of data which can be easily achieved with the help of a payroll software. The employee responsible for handling the payroll system should be updated about the salary norms, employee’s laws, tax deductions and filing etc. The key benefit of this system is that your company’s data remains confidential.
2. Bookkeepers and CPAs (Certified Public Accountants)
The payroll services of a company can also be outsourced to Bookkeepers and CPAs in order to deliver financial reporting, tax, accounting, audit and other economic services. Such payroll services are hired on paid basis. The process is followed by the preparation of financial statements of your business by bookkeeper or the CPA who further reviews the financial declaration for the maintenance of your employees’ data and delivering bank interface services.
As the work is to be done on critical and sensitive data of your company which includes employee’s data, salary, joining, leaves, etc. you must ensure that a certified CA or accountant with goodwill and reputation in the market is hired for payroll services.
3. Payroll Services
Hiring a payroll service agency for your small business is the wisest choice that one could make as it will be a team of payroll experts that would be working with you and will assist you in various tax and regulatory matters whenever required. The accounting and administrative services such as employees’ day-to-day expenses, automatic deductions, direct deposits, etc. are delivered by them.
It is the duty of payroll firms to make all the payments related decisions on behalf of your company and protects from penal consequences that might result due to late filing or any other wrong or misleading information.
Nowadays, the tech-savvy payroll service providers help the small business owners to monitor and manage the payroll details through secured services of internet thereby, reducing the cost of buying any payroll software or system. This increases the convenience factor for the business owners as they can keep the track of their employees’ payments, deductions, and leaves on their monitor.
Furthermore, email alert service is also offered by the payroll service providers to provide quick updates related to any payroll issue.