5. Choose your payroll system
Next, you’ll need to decide which type of payroll system to use. If you’re like most small-business owners, time is your most valuable asset. Consider your budget, the size of your business, and your comfort level with technology when evaluating different options:
- Online payroll services: Cloud-based platforms that handle all aspects of payroll, from calculations and tax filings to direct deposit.
- Desktop software: Software installed on your computer that allows you to manage payroll in-house. This can be a more affordable option but requires more manual data entry and updates.
- Accountant or bookkeeper: Outsourcing payroll to a professional can save you time but is often the most expensive option.
- Spreadsheets: While possible for very small businesses, using spreadsheets for payroll is generally not recommended due to the high risk of errors and the time commitment involved.
QuickBooks Payroll is a popular online payroll software that saves time and makes it easier to track important details such as employee hours, overtime, vacations, and deductions like health care premiums and retirement contributions.
In addition, it calculates the amount of the paycheck and tax withholdings, files the required tax forms, and pays your payroll taxes. Some business owners have their accountant run their payroll, but this can be costly.