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2005 is just around the corner and it's the right time to make a New Year's resolution. This year, why not make a vow to eliminate your payroll pains? Whether you process payroll manually or use a service, the outsourcing options available to small businesses are better than ever!
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Most small business owners start their operations with a focus on growing the business. Unfortunately, over time, they become bogged down with tedious, time-consuming administration work that detracts from core business operations. Instead of growing the business, they're suffocating under a pile of mind-numbing paperwork.

And the worst culprit is payroll.

Even experienced business owners find payroll is a pain. To begin, it is necessary to keep track of payroll regulations and changes in withholding tables-a time-consuming task. Calculating actual payroll amounts and deductions is equally tedious, and it is very easy to make a mistake.

Next is the arduous chore of writing checks and making proper quarterly and end-of-year filings for federal, state and local payroll taxes. It is not uncommon for small business owners to spend between two and eight hours processing each payroll if they do it manually. Mistakes are costly. Employee morale dips and employees lose faith in management when they receive checks or W-2s with errors. They may forgive, but they don't forget.

The Internal Revenue Service never forgets and is far less forgiving than employees. Filing late or with an incorrect amount results in a payroll penalty. Every year, four out of 10 small businesses pay an average fine of $845 for payroll errors. Cumulatively, that is billions of dollars in fines.

Plus, there are new fines in the works that will impact businesses without good payroll records. California passed a law that imposes a $750 fine on small businesses that aren't able to quickly produce accurate payroll records upon an employee's request. Experts believe many other states will follow with similar legislation.

Considering the penalties and the value of your time, processing payroll internally can be a very costly proposition, and may make it worth exploring outsourcing payroll. And, if you've already outsourced payroll, consider whether the current service is giving you everything you want. Payroll service offerings today are better than ever, and now is the right time to be thinking about making a switch.

Considering the Switch

The end of the year is the best time to sign up with a new payroll service. In fact, it's estimated that 60 percent to 70 percent of the small businesses that decide to outsource payroll each year do so effective Jan. 1. It means both parties start the New Year with a clean slate. There is no payroll history to transfer to the new provider. Changing providers after the New Year starts is possible, but it requires more paperwork. Now is the time that it is quick and easy to move.

Many offerings may be different from the last time you considered outsourcing payroll. The Internet has greatly improved the process of outsourcing payroll. Some even allow you to enter and view payroll information from anywhere at anytime, as long as you have access to a Web browser.

Once the payroll data is entered, the service automatically calculates, deducts, pays and files all federal, state and local taxes. Paychecks can be printed on the business' laser printer or routed to employees' bank accounts via direct deposit. W-2s are automatically prepared at the end of the year.

The key benefit of online payroll is enhanced control. Traditionally, payroll providers require small business owners to call in payroll at a designated time, even if that means having to leave an important meeting with a customer or an employee. With an online service, payroll can be processed whenever it is convenient.

Control also comes through the ability to modify payroll information in real time and view payroll calculations instantly. With traditional "offline" payroll providers, small business owners act through an intermediary-the payroll clerk-who enters the data. When mistakes are made, the business owner doesn't know it until the checks arrive.

Finally, control is increased through the availability of reports that track and monitor the payroll. Employers have access to online payroll reports in real-time after logging into a secure Web site. Similarly, employees can log in, access and print their payroll records, alleviating an administrative burden that frequently arises when employees need proof of payment history for loan applications and other purposes.

Beyond increased control, online payroll lets small business owners save time and money. It only takes a few minutes to process payroll online, so time is freed up for more important things, like getting a new customer or spending time with the family.

How do the new services save money? Because online payroll services don't have the same cost structure as traditional payroll services, the charges are between 30 percent and 50 percent less. Moreover, many payroll services guarantee your business won't incur a payroll penalty, which can represent a considerable savings.

Ultimately, outsourcing payroll is a no-brainer. It simply doesn't make sense to waste time, money and resources on a tedious task that is ancillary to the core business. Getting started with payroll outsourcing is easy enough. Explore different payroll services by using Internet searches or gathering recommendations from colleagues.

The bottom line? Making payroll is something that small businesses have to do. The good news is: from a process perspective, it is getting much easier to "make" payroll. Switching to a new payroll service for the New Year can alleviate pain and keep your focus on what's most important-growing the business with focus and attention.

Michael Alter is the president of SurePayroll, a company offering a Web-based payroll service designed exclusively for small businesses. For more information, contact Alter at (877) 954-SURE or visit www.surepayroll.com.

Sidebar: Time to Outsource Payroll?

When is the right time to outsource payroll?

Here are some signs you may be ready.

• Processing payroll is taking up too much of your time, and you'd rather use that time to focus on other things.
• It is difficult to keep track of when you need to pay federal, state and local payroll taxes.
• The business has received payroll tax penalties for filing late or for other payroll errors.
• Errors calculating payroll have necessitated re-issuing payroll checks.
• It's difficult to keep up with changes in payroll tax rules and regulations.
• Employees are asking for direct deposit.
• You've been so busy you forgot to issue payroll.
• Next year's growth projections will involve a number of new hires.
• A new benefits program will add a new level of complexity to the payroll deductions.
• The current system doesn't have good records or controls in place concerning employee vacation time and/or sick days.

Copyright © 2004. Healthcare Supplement Retailer