Payroll System
1.What types of payroll systems are available? There are three basic types of payroll systems.
Manual payroll means that you, or another employee within your company, calculates the payroll each pay period entirely on paper. You will need to calculate taxes, insurance, 401K, and any other applicable deductions in addition to each employee's actual earnings. The advantage of using a manual system is that it is very inexpensive, with virtually no start-up costs. The disadvantage is that whatever you save on start-up costs will probably be eaten up by the amount of time it takes to process payroll. In addition, it's very easy to make mistakes when processing payroll manually, and the penalty for mistakes, especially mistakes in taxing, can be very costly. There are at least free payroll templates out there, but it still difficult to do manual payroll processing.
The second type of payroll system is computerized. Many companies offer computer software that will assist you in processing payroll. You will need to input information for each employee when he is hired, but after that, the software will calculate payroll taxes and other deductions automatically. Most programs will also process W-2 forms for each employee at year-end, which can be a real time-saver. The advantage of this type of payroll system are numerous - fewer potential mistakes and less time spent processing payroll. In addition, employees can be trained to run the program more easily, so you won't need to depend on just one person to process payroll. The disadvantages are that you still have to input each employee's hours manually, and the software has to be updated annually or whenever new tax laws go into effect. There can also be additional charges if the software has to be configured specifically for your business.
The final type of payroll system is to use an external payroll service. Companies such as ADP and Paychex will process your payroll for you, including submitting all
Manual payroll means that you, or another employee within your company, calculates the payroll each pay period entirely on paper. You will need to calculate taxes, insurance, 401K, and any other applicable deductions in addition to each employee's actual earnings. The advantage of using a manual system is that it is very inexpensive, with virtually no start-up costs. The disadvantage is that whatever you save on start-up costs will probably be eaten up by the amount of time it takes to process payroll. In addition, it's very easy to make mistakes when processing payroll manually, and the penalty for mistakes, especially mistakes in taxing, can be very costly. There are at least free payroll templates out there, but it still difficult to do manual payroll processing.
The second type of payroll system is computerized. Many companies offer computer software that will assist you in processing payroll. You will need to input information for each employee when he is hired, but after that, the software will calculate payroll taxes and other deductions automatically. Most programs will also process W-2 forms for each employee at year-end, which can be a real time-saver. The advantage of this type of payroll system are numerous - fewer potential mistakes and less time spent processing payroll. In addition, employees can be trained to run the program more easily, so you won't need to depend on just one person to process payroll. The disadvantages are that you still have to input each employee's hours manually, and the software has to be updated annually or whenever new tax laws go into effect. There can also be additional charges if the software has to be configured specifically for your business.
The final type of payroll system is to use an external payroll service. Companies such as ADP and Paychex will process your payroll for you, including submitting all