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No matter how small or big an organisation is, payroll is one of the most complex and critical issue every organisation seems to face.
Why is payroll important for small business
The issue becomes even more crucial for small business concerns as they cannot employ expert financial analysts.
A small business is one that employs less than 100 employees. However, this number varies from country to country.
Definition
A payroll is the financial statement that shows the total amount of money paid to the people by a particular company. It's an accounting system that calculates the amount due to employees after the necessary deductions.
A payroll includes the following additions and deductions
Additions
- Salary due to the employees based on hourly wage
- Commission to salesperson
- Reimbursement to employees for expenses they bear on behalf of the company, e.g. travel expense
Allowances including
- House rent Allowance
- Dearness Allowance
- Medical Allowance
- City Compensatory Allowance
- Conveyance Allowance
Deductions
The payroll deduction is an amount that is withheld or reduced from the salary of the employee.
The deductions in Payroll includes
- Income taxes
- Insurance Premium
- Provident Fund
- State and Local Tax
Services
Do you want to spend your precious time in developing business strategies or in doing the tedious job of completing legal obligations!!!
The choice will certainly be the former one.
Why are the services important?
Nobody wants to spend time in filling up legal papers, completing formalities, complying with different formalities, calculating wages etc.
So, the small companies opt for the payroll services.
Different payroll Services
There are various payroll experts who work individually or in a group.
They work on the payroll system of the company. They relieve these small companies from the monotonous and lengthy calculations.
Role of payroll in small business
Payroll is one of the most critical elements in a business. The role of payroll in small business includes
- It helps the companies to comply with the legal formalities
- It ensures timely payment of the wages and salaries
- It also ensures that the pay checks are correct
- It acts as a financial and lawful record for the company that the payments were made
Small business payroll taxes
Often an important question comes to the mind that what are these payroll taxes and why are these levied!!
What are payroll taxes?
Small business payroll taxes are those taxes that small business deducts from the wages of its employees as a mandatory requirement.
Why are the payroll taxes important
These taxes acts act as a pool of funds for the government for various purposes. These payroll taxes are used by the government for the following purposes
- Health Care
- Unemployment Compensation
- Worker's Compensation
- Maintenance and Development of Infrastructure like roads, bridges, transportation
Types of payroll tax
There are various types of payroll taxes. Some of these are
- The Income Tax
- The State Tax
- Insurance Tax including contribution to Social Security Schemes
- Unemployment Tax
Payroll processing
The small businesses often face the problem of accurate payroll processing. For this processing, the small companies can also hire payroll professional.
Usually for the small business concerns the payroll processing includes
- Calculating payment amount
- Calculating deduction amount
- Preparing the pay checks
- Transmitting and Delivering the pay checks
- Presenting the complete payroll report for management supervision
The payroll process should be designed carefully. A well-planned payroll process can make payroll calculations easy and accurate.
Payroll programme for small business
Exhaustive, Monotonous and Cumbersome!!! Every small business relates the payroll system with these 3 words.
Why are the payroll-programmes important
Every small business wants to develop an economical and time saving payroll programme to solve these payroll related problems.
Different Payroll Programmes
Many payroll programmes have been developed to make this task easier.
There are various special software's available in the market for this purpose. Some of these are
- NannyPay 2000
- World SafeGaurd
- Pay Roll Mate 2007-09-10
Benefits of payroll-programme
- It is generally very easy to use
- Even small businesses can afford it easily
- The results are usually accurate
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