The Main Options For Paying Your Employees
The are basically three main options to consider for business owners to use for payment arrangements for their company employee's.
Each one offers its advantages and disadvantages which typically depend on the number of people employed.
A very small company just starting up will have completely different needs that a huge corporation with thousands of workers.
The most basic is a manual payment arrangement.
This can work very well for someone with less than ten employees.
It is perfect for anyone starting up a new company with very little cash flow.
All the work can be done by the employer and there is virtually no financial outlay.
There is however a considerable amount of time involved.
This can be the biggest downside, plus the possibility of making a mistake involving taxes.
Computing taxes correctly is a huge part of any business.
Absolutely accurate records must be kept and be available at all times.
The end of the year is especially important as the reports and W2 forms must be ready on time.
In addition there may be 401K or other retirement plans and health insurance deductions.
Many middle sized companies, those with less than fifty employees find that specialized computer software can work very well.
The first big advantage is that it saves a lot of time.
The personal information of each employee is entered and the program works out the rest.
It will even handle the end of year forms and tax reports.
There is far less room for a costly mistake, and the programs are usually quite reasonably priced.
Large companies with hundreds or even thousands of workers typically use an external service to handle payments.
Although it is the most expensive, this arrangement has many advantages.
There is far less room for mistakes, and should one occur it should be covered in the contract.
This protects the company from liability and tax concerns.
Such services as direct deposit may also be available, which is a big asset for the employees.
These external companies are usually very efficient and up to date with new tax laws.
The choice of payroll systems is really determined by the number of employees.
Also by the amount of liability the employer wishes to assume.
Saving money by writing your own checks may seem like a great idea, until you are faced with a serious tax situation that may require expensive legal help to resolve.
Each one offers its advantages and disadvantages which typically depend on the number of people employed.
A very small company just starting up will have completely different needs that a huge corporation with thousands of workers.
The most basic is a manual payment arrangement.
This can work very well for someone with less than ten employees.
It is perfect for anyone starting up a new company with very little cash flow.
All the work can be done by the employer and there is virtually no financial outlay.
There is however a considerable amount of time involved.
This can be the biggest downside, plus the possibility of making a mistake involving taxes.
Computing taxes correctly is a huge part of any business.
Absolutely accurate records must be kept and be available at all times.
The end of the year is especially important as the reports and W2 forms must be ready on time.
In addition there may be 401K or other retirement plans and health insurance deductions.
Many middle sized companies, those with less than fifty employees find that specialized computer software can work very well.
The first big advantage is that it saves a lot of time.
The personal information of each employee is entered and the program works out the rest.
It will even handle the end of year forms and tax reports.
There is far less room for a costly mistake, and the programs are usually quite reasonably priced.
Large companies with hundreds or even thousands of workers typically use an external service to handle payments.
Although it is the most expensive, this arrangement has many advantages.
There is far less room for mistakes, and should one occur it should be covered in the contract.
This protects the company from liability and tax concerns.
Such services as direct deposit may also be available, which is a big asset for the employees.
These external companies are usually very efficient and up to date with new tax laws.
The choice of payroll systems is really determined by the number of employees.
Also by the amount of liability the employer wishes to assume.
Saving money by writing your own checks may seem like a great idea, until you are faced with a serious tax situation that may require expensive legal help to resolve.
