How to Choose the Best Payroll System
Historically, the first payroll system was developed when the first boss decided to compensate his workers at predetermined intervals for the work they agreed to do. Fast forward a few millennia, and our choices encompass payroll taxes, direct deposit, flex time, benefit packages, IRA's and profit sharing.
- Difficulty:
- Moderately Easy
Instructions
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1
Assess your company's needs. Basically, a payroll system calculates an employee's wage at the end of a pay period and issues a paycheck. You need to determine what additional withholding, tracking and reporting you would like your payroll system to do.
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2
Determine the size of your payroll. You need to choose a payroll system which is efficient for the size of your payroll. With only one or two employees, having them sign a 1099 (independent contractor) form and writing paychecks yourself might be the easiest way to go.
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3
Decide how much time your company has to devote to using a payroll system. Outsourcing payroll to a payroll service is the least time consuming. Once the initial database is set up by the service you choose, you usually just phone, fax or email time sheets for each pay period. They take care of the rest for a fee.
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4
Figure out how much money you can afford to spend on a payroll system. You need to think about up front costs as well as monthly fees. You may also need to hire additional personnel to operate a sophisticated payroll system in-house.
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Tips & Warnings
Network with other business associates to see what payroll system has worked best for them.
Find out about a trial period before you sign a contract. Find out what recourse you have if the payroll system you choose doesn't live up to your expectations.
