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As a business owner, you want to focus on what your employees can do for your business — rather than getting bogged down by the nitty-gritty of paying them.
How often is your mind centered around administrative responsibilities like payroll? Have you ever incurred interest and penalties from payroll errors? When details, like income types and deductions and remittances, are diverting your attention, it’s easy to make costly mistakes.
Using payroll software is a cost-effective way to lower your risk and put more hours back in your day.
The facts about small business payroll.
Automating payroll with software and a bookkeeper by your side ultimately saves time and money. Oddly, in spite of this fact, current statistics show a trend of do-it-yourself that has the potential to doom yourself.
- Less than 15% of business owners and managers feel like they’re spending their time on the right activities.
- Payroll is the most commonly outsourced service, yet 60% of small businesses still handle this function in-house.
You have better and more important things to do.
Have you ever experienced this? No business owner wants to wonder if they’ve signed the paychecks while on a tropical island enjoying a pina colada. (If you take issue with coconut, picture a different beverage.)
Small business owners need payroll to be accurate, on time and in compliance with government rules and regulations. It’s hard to find the right person to achieve those standards in-house. Not to mention, you simply have other ways to leverage your strengths as an entrepreneur.
Payroll mistakes are more costly than you think.
When it comes down to it, accurate payroll builds trust and confidence. And of course, payroll mistakes have the opposite effect. Especially since nearly 49% of workers will start looking for a new job after two payroll mistakes. Which isn’t surprising because most workers in North America are living paycheck to paycheck.
- In Canada, approximately 47% of employees live paycheck to paycheck.
- In the United States, the number rises to 74%.
In the same vein, your business itself might be able to afford the payroll mistakes. It takes a substantial amount of time and effort to fix payroll mistakes. That’s because the Canada Revenue Agency (CRA) and the Internal Revenue Service (IRS) aren’t very tolerant of mistakes. The interest on penalties compounds quickly, it takes time to resolve these issues and you have a higher chance of being audited.
The benefits of automating payroll with payroll software.
As you weigh the pros and cons of automation, you can see that it gives you peace of mind knowing that you’re tax compliant. But beyond that, it’s a matter of saving on time and money.
- Nearly 25% of small businesses are still using pen and paper for their payroll records.
There are businesses that feel investing in payroll software and payroll experts are an added expense they can’t justify. But as mentioned above, it’s often a cost you can’t afford to ignore.
- Manual, in-house payroll results in 2X the mistakes.
In-house payroll mistakes happen frequently when you don’t have a payroll expert on deck. Unless you studied payroll tax laws in detail sometime in the recent past.
- Automation reduces payroll processing costs by as much as 80%.
When you do the math the cost of payroll software and/or using a bookkeeper often pay for themselves. Pro tip: Accounting/bookkeeping services and software subscriptions are also tax-deductible.
There’s more to payroll than just writing a check.
When small business owners think payroll, they usually don’t consider the many details involved. For example, here are two main categories to look at when paying employees:
Incomes — the amounts added to the paycheck.
- Salaries and wages
Deductions — the amounts subtracted from the paycheck.
- Income tax
- Unemployment insurance
- Private insurance premiums
- Savings plan contributions
- Mandatory garnishments
The aftermath after the math.
Not only do you have to understand and properly manage and calculate incomes and deductions, you also have to report these amounts and forward payments to the proper government authorities. Both the reporting and payments follow a set schedule that’s determined by both regulations and timing assigned by the CRA or IRS when you register your business.
Keeping these calculations accurate, filing the reports and remitting the payments is quite possibly the most time-consuming and error-prone part of payroll.
A cautionary payroll tale.
Here’s a real-life payroll story from GnarlyBooks founder and CEO, Carrie Mulrooney that shows how she was able to clearly underscore the benefits of automating payroll using payroll software:
“When we were moving to Wagepoint, we really didn’t give our clients much of an option. As a result, some of our client prices had to increase. At first, one of our clients, a seasonal pool care provider was initially highly resistant.
The irony was that his current manual processes were costing him more in fines than the fees we were proposing. When I broke this down for him, he quickly emailed back and said: “Wow! That’s obviously a no brainer. Let’s get on this.”
GnarlyBooks’ transition to Wagepoint [mini case study]
In the last year, GnalyBooks moved all of their clients over to Wagepoint.
Before bringing in Wagepoint, they had two full-time payroll specialists processing payroll manually.
Once they switched to Wagepoint, GnarlyBooks soon doubled their capacity internally, while requiring only half the amount of employees.
The benefits of payroll software and working with a bookkeeping firm.
What are the advantages of working with a bookkeeping firm and payroll software? Here are just three benefits amongst many more:
Financial and emotional ROI.
When you work with a top-notch bookkeeping firm and payroll software, you get the winning combination of expertise plus automation.
Greater insights for better decision making.
Chances are your bookkeeper will also take your payroll information and put it into an accounting platform, like QuickBooks Online or Xero. As payroll is a key piece of your financial puzzle, the better the information, the more details you’ll be able to see.
Best Practices for reporting, privacy and other areas.
With Wagepoint your basic payroll reports are updated every time payroll is run. Then at the end of the year, your T4 and T4As (W2s and 1099s for US readers) are created and, if desired, submitted for you. Plus, features like Wagepoint’s online employee portal help businesses comply with privacy laws.
When it comes down to it, working with payroll software and a bookkeeping firm saves you time and money. Not to mention enjoying peace of mind knowing that you’re compliant with government rules and regulations.
Our best-in-class partner.
We’re proud to have joined forces will our lovely partners GnarlyBooks to bring you this webinar on why small businesses need payroll software. They’re too humble to brag but we’re happy to do it for them. Take a look at some of their wins in the slide below.
Need we say more?
Now that you know the reasons why, put manual payroll in your past. You can either sign up directly with Wagepoint or partner with experts like GnarlyBooks who use Wagepoint as one of their go-to business tools.
The advice we share on our blog is intended to be informational. It does not replace the expertise of accredited business professionals.