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4 Things to Love about Small Business Payroll Service

Small and medium-sized businesses (SMBs) have several choices to meet payroll obligations. They can hire and maintain a dedicated payroll staff, they can allow the company accountant to handle payroll, or they can contract with a dedicated payroll services provider. For many SMBs, it comes down to a combination of cost-effectiveness.

What surprises many is the growth of online payroll for small business over the last ten years or so. Prior to the introduction of cloud computing, payroll services were mainly well-established companies with large offices and staff numbering in the hundreds. These companies essentially did what SMBs could not do in-house, simply by transferring the work to their office.

Today, cloud computing makes online payroll simpler and more cost-effective. The typical small business payroll service can do a lot more with a lot less thanks to cloud-based software and a range of services that provide just the level of assistance each client needs.

So what is it about payroll service that is so attractive to small businesses? According to a recent survey of more than 300 SMB payroll administrators, four primary features make payroll service worthwhile:

1. Reporting

Approximately 80% of respondents offered very positive views of payroll service reporting. The fact is that modern payroll is no longer a simple matter of taking cash out of the till to pay workers at the end of the week. There is a tremendous amount of federal, state, and local reporting involved. The advantage of working with a small business payroll service is that they are experts in reporting, whereas an in-house payroll staff may not be.

2. W-2 Forms

Reporting requirements include filing W-2 forms on behalf of employees. One half of the form, known as the W-3 is filed with the Social Security Administration while the other half, the actual W-2, is given to employees for tax reporting purposes. The thing about W-2 forms is that they are incredibly detailed. If all of the information does not match up, there could be significant delays in income tax filing. Small business payroll services take all of the headaches out of W-2 forms through the use of software that links payroll and W-2s.

3. Direct Deposit

Some 72% of survey respondents said they appreciate the direct deposit capabilities offered by small business payroll providers. With direct deposit, there are no more paper checks to write. The small business payroll department need only ensure that there is enough money in a dedicated bank account to meet weekly payroll; automation takes care of everything else. Funds are transferred from the company’s account into the accounts of workers at the end of every pay period.

4. Deductions

Lastly, 70% of the survey respondents were pleased with the fact that their payroll providers take care of all deductions for them. Deductions can be anything from Social Security (FICA) to income tax. The payroll service makes sure all funds are calculated and deducted properly, and that required payments are made on time.

In a nutshell, the results of the survey indicate that SMBs find small business payroll services attractive because they eliminate all of the headaches of modern payroll. Allowing the service provider to handle payroll makes it possible for small businesses to redirect their resources into serving their clients.

In light of the survey, it would seem that the biggest payroll decision today’s small businesses have to make is whether to go with a traditional payroll company or an online payroll service. Both have their advantages and disadvantages that need to be looked at carefully.