Payroll Software or Payroll Service: Three Questions to Ask Yourself When Deciding

Remember the days of using a calculator and a typewriter to process payroll? Thankfully, those days are gone, and there are much simpler tools to make the process more efficient. Today, there are tools available to help ensure timely tax payments, accurate and complete payrolls, and to make sure employees are paid on time. These days, most businesses use one of two methods to process payroll: in-house payroll software, or a payroll service. As a business, you must choose the method of payroll processing that works best for you. Start out by asking yourself these simple questions.

What staff is available to manage the process?

No matter which processing method you use, you will need staff to manage the associated tasks. Many in the business world tend to believe that a payroll service takes less staff time, since it handles the tax payments and processing. While this may be true, be sure to account for all of the time your staff must spend collecting and entering time data for employees (if applicable), updating employee earning and deduction changes, running payroll reports, and generally making sure that data is accurate and timely. When using a payroll software program, it is a good idea to have at least one employee who is familiar with your payroll processes, and your payroll software. He/she should be able to set up employee information, enter time in the appropriate manner, process payroll, run reports, maintain tax filing schedules and be able to file them using your system.

Who manages what?

It is important to consider your current staff and their expertise, when you are deciding on payroll processing. For instance, if you don’t have a skilled HR person, you may lean toward a payroll service, since some of them offer HR services. If you have a person who is skilled in using in-house payroll software already, you might find it easier to stay with that. Consider who you have on staff and their expertise, and then whatever system you choose will come along with a much smoother transition.

Where is my data safest?

There is a major different in the location of your payroll data when comparing a payroll service to in-house software. With a service, your data is typically stored in a remote location and accessed via the internet. Of course, most services use strong encryption to provide security for your data. For payroll software, your data is stored on your own server, so the information is not available via the internet. However, you still need to be sure there is a good internal security system, since payroll data is sensitive, and you don’t want unauthorized employee’s to log in and view or edit sensitive data.

Payroll Solutions: How They Keep Employees Happy

No matter whether you use payroll software or a service, payroll solutions are definitely a key way of ensuring your payroll is easy to manage, accurate, and that taxes are paid on time! And of course most importantly, that your employees get their checks. There are a few additional steps you can take to make your employees happy. Just by adding features that may already be included within your payroll solution, you may increase the happiness level of your employees!

Add direct deposit

You might just be surprised how much happier employees would be by receiving their pay directly deposited into their bank account, rather than receiving a paper check. Direct deposit allows employees to eliminate the hassle of going to the bank, and also reduces the chances of lost checks. Some payroll solutions even allow for the depositing of funds to unlimited bank accounts, allowing for Christmas savings accounts, additional checking accounts, child savings accounts, and more!

Offer pay card option

Some employees may not have bank accounts, and in those cases it can be difficult or costly for them to find a way to cash their paychecks. Pay cards can be a great way to solve this problem! Deliver employee pay on reloadable debit cards instead of paper checks and you have just made some of your employees very happy by providing them an easy way to access the money they have earned.

Translate pay stubs into employee language

Do you have employees who are not native English speakers? Depending on their language skills, these employees may be better able to understand the important details of their pay and benefits if you have them printed on their pay stub in their native language. Payroll solutions that offer this feature will typically allow you to enter the translation one time, and assign it to the applicable employee(s), and the pay stub will be printed that way automatically from then on.

Add important information to pay stubs benefit summary etc.

Are employees constantly asking how much vacation time they have left? How much they’ve contributed to their 401K? Details like this, and much more can be included on a pay stub. Surely your company has its own unique set of details which you may want to include on the pay stub, so add whatever is most important to your business and your employees.

Add online pay stub access.

Many payroll solutions are now offering the ability for employees and previous employees to access their pay stubs online! No more searching around for slips of paper to access the information they need. Provide employees or previous employees with a password, and they will be able to look up their pay stubs and even W-2 forms online, making it easy for both them and you.

Don’t assume that what you are doing is the best or only solution available! You could make your own job easier as well as bump up employee happiness by adding features you may already have in your payroll system.

Payroll Tax: Withholding Local Tax by Work Location and Residence

Many of you processing payroll in a wide variety of states face a similar challenge: local payroll tax withholding amounts by work location and by residence for your employees. Here’s more about how it works, and also suggestions for handling it within your payroll software.

Employees who work at several different locations during the same pay period may require a different local tax withholding amount, determined by the city in which the work is performed. In addition, there may also be a local withholding tax for the city of their residence. Without a way to track both of these taxes, you can easily make the wrong calculations or spend hours of time manually trying to figure it out. Here are states with some cities that assess local employment taxes.

  • Alabama
  • Colorado
  • Delaware
  • Indiana
  • Maryland
  • Missouri
  • Ohio
  • Pennsylvania
  • Arkansas
  • District of Columbia
  • Iowa
  • Kentucky
  • Michigan
  • New York
  • Oregon

Keeping track of these withholding amounts is complex. But there is a way to handle this situation within your payroll software. You can create ‘Local Tax Entities’ within your payroll software, relate the tax entities to the appropriate employees, and then during time/pay entry you can select the appropriate local tax entity assigned to the time/pay entry. This is something not all payroll software programs will allow you to do. It is worth asking your software provider if there is a way to handle it in the program you are using. If not, give us a call. CenterPoint Payroll Software can easily handle payroll local tax withholding, and much more. (PS: if you are a Red Wing Software customer with a current Customer Care Plan, give us a call and we will help you get this set up!)

Migrating Your Software: Real Data that can Help You!

Since we are a software company, we work with customers nearly every day who are moving to a new system, and are often bringing some information over from their old system to the new one. (This is referred to as ‘migrating’.) Of course, we all have our own opinion when it comes to migrating. Your company may have migrated with great success and had no issues, and another may have run into some problems along the way that left a bad taste in their mouth. There are so many variables involved in migrating your software, all of which can affect the success of your migration. Here are some statistics from a survey taken by real customers of Red Wing Software and customers of other software products. Understanding the experiences of others who have been there can help you make your own migration successful.

The most important factor for a smooth migration is the support team. This answer got 59% of the responses - more than double that of any other choice selection! There are many things that can help with your software migration: training, help documents, videos, and more. But the support team is probably your most helpful resource during a migration. Anytime you have an issue or question, or need to know how to do something, you can just pick up the phone and give them a call. That’s why using support should be a big part of your plan to get the software up and running. You may feel like you are calling too often or bothering the support team, but that is their job, and they deal with the exact things you are dealing with every single day. Every call you make is an investment in your future with your new software.

36% of respondents said training was the number one thing they could have done to improve their migration experience. If you are thinking of getting training prior to migrating, you might want to consider this number! Once you start the wheels moving in the process of your migration, it’s hard to stop it and get training at that point. So think ahead when it comes to training. If you or your staff don’t know anything about the software and need to familiarize yourselves, plan to either attend training, or at least do some online tutorials, well before the actual migration process begins. Then you can get all of your questions answered and understand processes, which will greatly reduce your stress level once you start using the software.

Only 9% of people said they had a plan to help them stay organized. You might think you are far too busy with everything else involved in your software migration to come up with a migration plan. But just think about it, how lost would you be in your daily life without a calendar to keep track of what there is to do. Even if you just jot down some notes on paper, it’s a good idea to put a plan together for your migration. Key components to include are: who will do what, how long each step will take, and what will happen if one of the steps falls through or is completed late. When you are prepared for whatever happens, the migration process will go much more smoothly.

You know you have to make the switch from your old program to something newer! In the end, your company will reap the benefits of newer technology. Why not make your migration a successful one by heeding the comments of those who have been there and done that?

Payroll Software Databases – Combine or Set Up Separately?

Implementing a new payroll software system can be a daunting task. There are some standard steps to anticipate when setting up the software system, regardless of which payroll system you choose to use. One crucial step during the setup process is deciding whether to set up multiple companies/employers in separate databases or to combine them. This decision can greatly affect how you view and analyze your payroll data, so it is important to take some time to consider which option is right for you and your business. Learn more about which database setup may be right for your company.

When setting up your new software system, be sure to consider what a database means before setting it up in your system. A company/employer is typically defined as a tax entity with financial activity. This allows multiple companies/employers to share a database, if they are part of the same operation. Companies/employers can then share accounts and analyze the combined data. At the same time, each company/employer maintains separate financial records. Be sure you understand how your software handles this before starting to set up your new system.

There may be circumstances that are better suited to setting up separate databases. If you have more than one company and they do not share the same type of activities, share the same type of accounts, or you do not wish to combine data from all companies in an analysis, you may want to consider setting up separate databases, rather than combining them into your payroll system.

When your database is set up correctly, you will be able to quickly pull and analyze your payroll data in a way that is most meaningful to your business.