How Do You Manage Payroll?

[KristineS]

I'm interested in how people manage their payroll. I've worked for companies that have ranged from typing payroll checks on a typewriter to companies that have an outside firm handle all the payroll.

If you have employees how do you manage their paychecks and how do you make sure you're up to date on all the latest laws effecting paychecks?

[Evan]

I process payroll checks manually, using Microsoft Excel for calculations. The most "complex" thing to calculate is state/federal income tax, as everything else is a percentage regardless of the number of days in a payroll period or whether you're married or single.

I stay up to date by doing lots of reading!

[Evan]

For others, I'd recommend outsourcing payroll over doing it in-house unless you have somebody who is well aware of what they're doing.

Payroll is pretty cheap, and they can offer direct deposit, tax deposits, and timely filing of tax forms to the various government agencies. That in itself is worth the price!

[Steve B]

We do what Evan says. We only have one employee - we e-mail his hours to the accoutant and he e-mails back the amount to pay him. He handles all the other stuff for us and it is pretty cheap.

[pete]

I no longer do payroll, but while I was the last time around, about 4 employees, I used QuickBooks, but did it manually. I simply used the tax tables supplied by the IRS and entered the figures into the QB payroll module and printed the checks, That way I could print the 941 info as needed.

I'm amazed at how many people look at payroll as a mystery. There is not much to it. Depending on how many checks you are writing it can be 5 or 10 minutes a week.
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[Steve B]

I'm sure it would be easy enough to do. I give it to my accountant for two reasons.

1. He has all the liability if something is done wrong.
2. I am giving him some easy business, so he will take care of me with other more difficult matters. For instance, I can call him with a question and he never charges me because I'm a regular customer.

It's kind of the same reason I let my mechanic change my oil. It's simple enough to do myself (and cost effective), but he seems willing to do things out of the ordinary for me because I'm a "good" customer. For instance, he gave me his cell phone number and it came in handy when I was stuck on the side of the road on a friday night. I know he doesn't give that number to many people.

[orion_joel]

Thankfully payroll in Australia is a little easier, however not something i have to worry about myself. Income tax is a single amount and simple to calculate using the tax office tables. The only other thing is Superannuation, which is a fixed percentage of the pay.'

The correct version of either QB or MYOB in Australia make it fairly easy once it is set up and i used to do payroll type activities, for my father through MYOB when he was operating a company. At the time i was only about 14 or 15 so that is just how easy it actually is.

[Evan]

I'm amazed at how many people look at payroll as a mystery. There is not much to it. Depending on how many checks you are writing it can be 5 or 10 minutes a week.

There are a lot of complicating factors that can make payroll a pain in the butt.


Do you offer sick or vacation time? Do you accrue this time, or is it lost at the end of the year?
Do you have a 401(k) plan? Do you contribute anything to your employees?
Do you offer health insurance to employees? Then this is something to deduct?
Do you provide direct deposit?
Are all of your employees residence of the state you do business in? If not, do you want to withhold taxes and remit them to their home state?
Are you certain that you're withholding state-specific taxes, or accruing other tax liabilities the business may be responsible for? In Rhode Island, employees are subject to TDI. Employers contribute to Employment Security and the Job Development Fund.
Did you correctly fill out each form and submit a corresponding check to each government entity by the date required? Also, if your payroll is large enough, are you paying according to the proper deposit schedule as mandated (separately) by the IRS or Department of Taxation.

While it can be simple, you presumably don't have every employee that has a 401(k), or has health insurance, or that wants direct deposit. So a lot of variables can create a quite complex payroll manner.

On top of it, the hassle of using the payroll charts, the margin of error can be large. Plus any errors you make have to be eaten up by your business.

So instead of $30.00 being withheld for FICA, you withheld $3.00, that becomes $27.00 the company pays on behalf of the employee.