Category: Accounting

Keys to Successful Small Business Accounting

Bookkeeping, finances, revenue – these are all terms, among many others, that tend to be intimidating for many small business owners to tackle. Keeping track of accounts receivable, billing, collections is also an arduous task for many. The main problem tends to be that a lack of attentiveness in the financial health of the business is detrimental, and leads to many costly errors that are often easy to avoid.

By looking at each individual aspect of the accounting business, and asking yourself some questions associated with each, this is already a big step.

Some questions may seem easier to answer than others. For the ones that pose a challenge, think deeply about why that challenge exists, and what steps you could take to make answering that question easier the next time around – this will become the foundation of your accounting strategy going forward.

Here are some of the areas that should be given careful attention in small business accounting, and important questions you should be asking yourself for each one.

1) Bookkeeping

As you probably already know, bookkeeping is all about the details. Revenue tracking may not seem like it is all that important, but those small decisions we overlook tend to snowball into large errors very quickly.

How will you view your books?

How will you get paid? Will you accept online payments?

How will you keep track of your expenses?

How will you keep your business in the black? (Budgeting)

By putting some small measures in place, you are ensuring that the rest of the financial process will become easier to handle.

2) Payroll

No business will thrive without proper payroll practices in place. Employees need to be compensated for their time in a consistent manner, that much is certain. However, there are other questions associated with that aspect that must also be considered:

How will you handle payroll?

Will you offer payroll benefits?

How often will employees be paid?

Will they be salaried or hourly?

Payroll benefits are a good incentive for employees, while also allowing you some breathing room when it comes to taxes. Similarly, there are pros and cons to the frequency of payments, as well as whether they should be salaried or hourly that must also be considered.

3) Taxes

Taxes are an unavoidable and time-consuming process – and unfortunately, they’re inevitable. There are ways of making it easier on yourself, however. Figuring out what your obligations are to begin with is vital, as well as ensuring that you are paying the right amount.

How will you determine your tax obligations?

How will you know if you’re overpaying or underpaying?

Are there automation systems in place

And if it becomes difficult to manage, consider automating certain processes to make it go smoother, or outsourcing to save yourself some resources in the long run.

4) Banking

Banking is another one of those small issues that tends to grow in size if ignored. Using a credit or a loan comes with obligations, so it is important to work with a bank that is right for your business.

Where will you keep your accounts?

How many bank accounts will you have?

Will you use a line of credit or a loan?

Keeping your personal and business account separate is also incredibly important, so it might be worth considering using different banks to reduce the temptation to blur the lines between the two.

5. Reporting

Financial reports are absolutely paramount to a successful business – as is reviewing them regularly. Set up key performance indicators, establish a baseline and then use that to measure success going forward.

Regular financial report reviews will help you spot irregularities and errors early on:

How will you generate reports?

What reports will you be viewing?

How often will you be viewing your reports?

There are many different indicators you can establish that will work with your business needs, and it is imperative to be disciplined in reviewing these. Whether it is monthly, quarterly or somewhere in between – regular financial report reviews will help you spot irregularities and errors early on.

6) Systems & Workflows

Establishing a system and workflow will not only help increase the success of your business, especially once it is streamlined, but it also helps keep employees accountable. Some questions to ask here are:

Who will be entering expenses?

Who will be generating invoices?

Who will pay the bills?

Who will generate reports?

Creating distinct responsibilities for your financial team will help in keeping track of important financial aspects, but will also give your employees a defined scope of work that will help them succeed.

Find A CPA Mentor

A mentor is a person who is older than you and has many years of experience in your field of work or a related area. This individual has faced the same sort of problems and issues that you are confronting and has valuable insights to share.

Having someone who you can turn to when your job is at a critical juncture can provide tremendous benefits. The advice that you receive can help you to avoid making a mistake that could derail your career.

But what if you can’t decide on a mentor?

You don’t have to restrict yourself to one mentor. It is perfectly acceptable to have two or more. One mentor could help you with technical matters related to the accounting profession, and another may have inputs to offer on your career progression.

Try and remember that as a mentee, you need to do your part to nurture and grow the relationship. You may think that you don’t have much to offer to an older and more experienced person who has been in the profession for many years. But it’s important to apply your mind to this issue and try and repay your mentor for the advice and help that you receive, either through networking opportunities of a simple “Thank you!”

Five Secrets To Successful Accounting Services

If you’re a business owner with annual revenue from $5 to $50 million, you know some of the challenges involved with accounting services: finding competent bookkeepers and certified public accountants, managing your accounting department, and going deeper than bookkeeping processes to actually extract valuable, actionable information from your financial statements.

The best accounting services have time-tested strategies in place to deliver the results business owners need every time. We’ve kept these accounting services under our hats as secrets of our trade, but we’re sharing them with you to help you in your search to find an accountant you can trust.

1. Timely bookkeeping is the cornerstone of business success.

This one is simple. If your bookkeeping is not up to date, it’s worthless to you as a tool for financial forecasting, or even to find out if you’re going to bounce a check on a day-to-day basis. From cash flow statements to balance sheets, bookkeeping should be kept up-to-date at whatever frequency you and your accounting department decide, based on the volume of your business.

2. Accuracy is king.

Not only must your financial data be up to date, but it also has to be accurate. Otherwise, any conclusions drawn from financial forecasting will be wrong. In the computer programming world, they call this GIGO (“Garbage In, Garbage Out”). Your accounting services provider should have a financial controller/CPA who oversees the work of every full-charge bookkeeper to ensure accuracy.

3. Timeliness and accuracy are ensured through the right processes and procedures.

Many in-house accounting departments strive for timeliness and accuracy. They know it’s the bookkeeping ideal, but they don’t know how to achieve it. By establishing the right bookkeeping processes and procedures, customized to each client’s preferences, but based on our decades of experience at AccountingDepartment.com, we promise and deliver financial data that is up-to-date, accurate and available 24/7/365 to our clients.

4. Establishing controls helps protect businesses from employee theft and fraud as well as from innocent bookkeeping errors.

No one is perfect. We acknowledge that. That’s why financial controllers oversee our bookkeepers to ensure the accuracy of your financial records. When the books are closed at the end of each month in the presence of the business owner, bookkeeper and financial controller, they are “locked” so no one can change them. This is just one of the many internal controls in place to help eliminate fraud and ensure accuracy in your accounting services.

5. To maximize their success, business owners need accounting services with the knowledge to implement the right strategies.

It’s good to know exactly what goes into successful accounting services. But it’s another thing to know how to execute the right accounting strategies in your business to increase your odds of financial growth and success. 

AccountingDepartment.com has the extensive experience and knowledge necessary to execute successful, time-tested accounting services to take your business to the next level.

Accounting Skills You Need to Succeed on the Job

The hiring environment has become more uncertain in recent months, to say the least. However, the positive news is that many businesses are still staffing both on-site and remote positions, including in their accounting and finance departments. If you have a well-developed set of accounting skills, that could increase your chances of being a strong contender for jobs you are targeting.

Essential accounting skills encompass more than the ability to crunch numbers, complete expense sheets and depreciate fixed assets. In addition to traditional accounting knowledge, there are a number of hard and soft skills that every accounting professional needs, whether they are working in an office or remotely.

Following is an overview of seven sets of accounting skills — some technical, some not — that can help you to advance your accounting job search, as well as your accounting career.

1. General business knowledge

The scope of accounting and finance positions has been expanding over time, and especially so in recent years. In particular, these professionals must collaborate and coordinate more often with colleagues in other departments.

So, it’s important to know what other functions do and how the work of the accounting and finance organization helps to support their initiatives. The better you understand the overall workings of the business, and how you and your team fit into the “big picture,” the more productive your relationships outside your department will be.

2. Up-to-date technology expertise

Finance leaders are often challenged in finding professionals who have up-to-date technology expertise listed among their accounting skills. But you can be sure that working with finance-specific software programs will be a given in your role, as accounting firms and other organizations continue to expand their use of accounting automation.

Other examples of technology-related accounting skills that are in demand by many employers include:

Advanced Excel ability

Enterprise resource planning (ERP) experience (e.g., SAP, Oracle)

Expertise in big data analysis, advanced modeling techniques and SQL

Knowledge of business intelligence software (e.g., IBM Cognos)

Microsoft Visual Basic capability

Aptitude with Hyperion (for analyst and financial reporting roles)

Microsoft Visual Basic skills

Knowledge of QuickBooks (for positions with small and midsize firms)

If you want to advance in your current position, consider asking your manager about online accounting skills training options that the company may be able to arrange. Or, if you’re currently searching for a job, you could enroll yourself in an online course in one of the skills areas listed above. Being proactive about your professional development could impress a potential employer.

Preparing for a job search? Learn how Robert Half can help you get hired.

3. Communication skills

Stay-at-home orders have put communication abilities front and center among must-have skills as many workers have transitioned to remote jobs. The good news is that accounting and finance professionals have had to hone one of these abilities for years: presenting information in an easy-to-digest manner, especially for audiences that are not as numbers-savvy. Now, it’s time to refine other communication skills.

The ability to relay information clearly and concisely by enhancing your verbal and writing skills is essential. More good news is that you and your colleagues working from home may already have a leg up on this skill, as you’ve had to turn to email (writing skills) and video platforms (verbal skills) for each and every daily interaction, from business requests to simple morning greetings.

4. Adaptability and flexibility

Adaptability and flexibility were also top among the skills accounting and finance professionals needed even before the pandemic. Technological change, like the rise of artificial intelligence (AI) as a critical business tool, was a key driver for that trend, and you can expect that it will remain so. But now, as businesses try to define and operationalize their next “new normal,” the ability to pivot and roll with change is an absolute must.

5. Creativity and a willingness to help others

The best accounting professionals are ambitious self-starters who can develop new insights. You may need to serve as a source of aid when colleagues require help navigating a particular program or managing their first busy-season audit.

Your managers may also look to you for fresh ideas as to how the organization can ensure continuity of service to clients (especially during this time of disruption), improve compliance procedures or address a host of other issues.

Get Timely Information

Successful accounting departments gather key financial information in a timely manner. In today’s day and age transactional information can be accessed almost instantaneously and incorporated into the accounting system quickly.

Without up-to-date financial knowledge, budgeting and other financial forecasting actions cannot be relied upon to be accurate. Additionally, out of date financial information can make investing or decision making a risky proposition. It’s one thing to learn that your plans exceed your budget, but another entirely to learn this through a check bouncing on the technology or service you’re investing in.

Get Accurate Data

Accurate data gathering is essential for a successful accounting department or anyone who wants to call themselves a competent accountant. Without accurate financial data, you will not be able to create actionable business decisions.

When a company is making strategic decisions based on an inaccurate budget forecast or a faulty cash-flow statement, the consequences can be huge and can hinder company performance (or even reputation) for some time.

Process and Procedures

Timely information gathering is the goal for a successful accounting department, but processes and procedures are the tools that will bring this success.

Having clear, appropriate Handling procedures ensures that responsibility for information gathering is clearly defined and divided among the department’s accountants. Having the proper Reconciliation procedures ensures that all information entered into the company’s master ledger or database is accurate. Finally, having the right Review procedures is a failsafe against inaccuracy, ensuring that no moves are made based on the faulty financial information.

What is the difference between tax planning and tax avoidance?

Tax planning vs tax avoidanceAn assessee can reduce his/her tax liability, by legitimate means, in two ways – tax planning and tax avoidance. The tax planning is described as the arrangement of financial activities in a way that the assessee can avail maximum tax benefit by making best possible use of all the legal benefits, i..e deductions, exemptions etc.

On the other hand, the tax avoidance is a technique of refraining from tax liability, through just and fair means, but intends to defeat the fundamental motive of the legislature. The dividing line amidst the two concepts is thin and blur.

The difference between tax planning and tax avoidance primarily depends on the difference in benefits that are availed to minimise tax burden. So, take a look at this article which might help you understand the two terms in detail.

Definition of Tax Planning

By the term ‘tax planing’ we mean the arrangement of one’s financial affairs in such a way that utmost tax benefits can be availed. This can be done by applying the majority of advantageous provisions which are permissible by law and entitles the assessee to obtain the benefit of the deductions, exemptions, credits, concessions, rebates and reliefs so that the incidence of tax on the assessee would be minimum.

Tax planning is an art of logically planning one’s financial affairs, in such a manner that benefit of all eligible provisions of the taxation law can be availed effectively so as to reduce or defer tax liability. As tax planning follows an honest approach, by conforming to those provisions which fall within the framework of the taxation law.

Definition of Tax Avoidance

Tax avoidance implies any arrangement of financial activities, though done within the legal framework, overpowers the basic intention of the law. It involves taking benefit of the shortcomings in the statute, by deliberately parking the financial affairs in a way that it neither violates the tax law nor it attracts more tax.

Tax avoidance includes cases, wherein the assessee seemingly mislead the law, without making an offence. And to do so, the tax payer uses any scheme or arrangement, which reduces, defers and even completely prevents the payment of tax. This may also be done by shifting of tax liability to another person, so as to minimise the incidence of tax.

Methods of Tax Avoidance

Tax Avoidance is a way of avoiding tax payment in a manipulative manner. A taxpayer can avoid tax payment by indulging into different activities such as:

• Hiding facts
• Creation sham transactions without reflecting the true purpose
• Make fictitious contracts or transactions
• Mold actions without falsification of the accounts

Steps of Tax Planning

• Early Planning: Most of the taxpayers start their paperwork when the due date of filing the tax return is close. Thus, taxpayers are encouraged to plan their tax savings early to have a better estimate of the investments and benefits that can be claimed by them.
• Tax Liability: It is the step of the actual calculation of taxability based on income and after claiming all the rebates and deductions. Preparing an estimate of tax liability beforehand can also help in structuring the investment and savings part.
• Risk level: This step involves estimating the optimal level of investment risk as per the current financial situation of the taxpayer. Following factors have to be considered for risk profile:
• The risk associated with the amount of expected return
• Level of risk that the taxpayer is ready to undertake
• Level of risk that is acceptable by the taxpayer

Key Differences Between Tax Planning and Tax Avoidance

The difference between tax planning and tax avoidance can be drawn clearly on the following grounds:

• Tax planning refers to a mechanism through which one can intelligently plan his/her financial affairs in such a manner that all the eligible deductions, exemptions and allowances, as per law, can be enjoyed. Tax avoidance is an act of intentionally structuring one’s financial affairs, in such a way that his tax liability is minimum or even nil.
• While tax planning is both legal and moral, tax avoidance is legally correct, but it is an immoral act.
• Tax planning is basically savings of tax. Conversely, tax avoidance is hedging of tax.
• Tax avoidance is accomplished with a malafide motive. On the flip side, tax planning has the element of bonafide motive.
• Tax planning aims at reducing tax liability, by practising the script and moral of law. As against this, tax avoidance aims at minimising tax liability, by practising the script of law only.
• Tax planning is permissible by law, as it involves adhering to the provisions of tax. In contrast, tax avoidance is not permissible by law as it attempts to take advantage of the defects in the law.
• Tax planning uses the advantages, provided by the law to the assessee. Unlike tax avoidance, which uses the loop holes of the law.
• The benefits of tax planning can be seen in the long run. On the contrary, the benefits of tax avoidance are for short term only.

Tax evasion is deemed as tax fraud

Tax evasion is any illegal method or unlawful attempt to reduce tax liability of taxpayers. It is highly attached to techniques or illicit practices which results in showing fewer profits to minimize the individual or company’s tax burden.

Examples of tax evasion usually are the followings:

• Making false statements and information
• Inflating deductions without legal proof
• Hiding related documents to prove the actually earned business profits like records of transactions or report of cash income
• Concealing or transferring assets illegally
• Magnifying tax credit
• Claiming excessive expenditure

Tax evasion can be deemed as a form of tax fraud which indicates illegitimate and deliberate actions for not paying tax. Due to the fact that employing such unfair means is fraudulent, any taxpayers regardless of individual or business committing tax evasion behaviors would be prosecuted for offence and must be subject to stringent punishments of a heavy fine or imprisonment.

How to choose a bookkeeper you can trust

Tradies are always pushed for time when running their own business. Hiring a bookkeeper to keep your accounts in line is a good idea so you have one less problem to worry about. Here are some tips to help you choose a bookkeeper you can trust.

Know what you need

The first thing you need to do is to assess your business needs so you know what sort of bookkeeper you need. As a tradie you have unique needs. Consider how many transactions you make and the services you require to keep your business on track.

Hire a bookkeeper that offers a full service

When you hire a bookkeeper that offers a full service, it can save you money. A business that offers a full service does everything from bookkeeping and invoicing to preparing and lodging BAS statements. They should use good software and give you good advice about the best accounting methods for your business and what expenses you can claim as a tradie.

Do they have industry experience?

The single most important thing is to hire a bookkeeper with experience working with tradies. This way they know how you operate and exactly what expenses you can claim. A bookkeeper with industry experience will easily understand your business and what it takes to do a good job. A good bookkeeper can give you good advice on how to improve your business operations to help it grow and become more successful.

Avoid hiring the cheapest bookkeeper

Cheap is not always the best. As a tradie you would already know this. Sure, you are working within a budget but you get what you pay for. If you think hiring an experienced bookkeeper that understands your industry is expensive, hiring a bad bookkeeper will cost you more. Can you afford that?

The beginner’s guide to bookkeeping

While the days of dusty ledgers and paper receipts are becoming a thing of the past, bookkeeping is here to stay. From better budgeting and tax preparation, to planning and peace of mind, good bookkeeping equals good business. But it’s so much more than writing down numbers in a ledger or a software program and tracking money in and out.

Bookkeeping 101

The short answer is that a bookkeeper tracks and records all of a business’ day-to-day financial transactions. That includes handling customer receipts, invoices, payments to suppliers, client billing, payroll, tracking and maintaining budgets, recording depreciation and reporting issues as they arise.

What’s the difference between accountants and bookkeepers?

At this point you may be asking yourself “isn’t that what accountants do?” Well, no. Bookkeepers are primarily concerned with the daily transactions of a business and handle more of the financial administration, while accountants take a more “big picture” approach to your financials, offering insights and information based on what bookkeepers do. Moreover, accountants often help business owners with tax strategy and planning, completing tax returns and financial forecasting. 

Do I need to hire a bookkeeper?

That depends. Because bookkeepers and accountants work in tandem to provide you with a clear picture of your business, having both on staff is important as your operations grow. Initially, many small businesses opt to do it themselves or hire a bookkeeper part-time. 

Get a good bookkeeping program

Explore the types of bookkeeping options available to you, which range from handwritten ledgers to Excel spreadsheets to automated systems, and choose the right solution for the way you work. If you can hire a part-time bookkeeper, talk to them about what they’ve used for similar clients and allow them to help you select the best option for your business.

How to Choose an Accounting Degree Program

Many people consider accounting the language of business. This age-old field remains a vital part of the modern commercial world. Companies across the nation need individuals who can understand numbers and make sense of their bottom line. According to the Bureau of Labor Statistics (BLS), accounting jobs can expect steady growth across the next decade. The BLS projects that employment of accountants will grow at a rate of about 6% from 2018-2028, the average rate of growth for all occupations in the U.S. Accounting plays an integral role in the economy, and the profession continues to evolve.

Below, we cover everything you need to know to select the right accounting or finance degree for today’s business world. We explore the different accounting degrees available to accounting majors and examine the many factors to consider when selecting a degree program. We also explore what to look for in an accounting degree curriculum and the various specializations students can pursue. Additionally, we highlight the many accounting degree career paths open to new graduates, as well as the salaries that accountants typically earn in the modern economy. This guide concludes with answers to frequently asked questions about becoming an accountant.

WHY YOU SHOULD CONSIDER AN ACCOUNTING DEGREE

Earning a degree in accounting prepares you to enter a growing field that features robust demand. Every organization — whether it is a government, nonprofit, or for-profit entity — needs to know the state of its finances, which makes financial jobs on pace to grow faster than the average for all occupations.

Information and data drive today’s economy, and accountants hold the key to an organization’s financial information. Accountants often find themselves moving beyond bookkeeping and into boardrooms to help make decisions that propel companies forward. Some accountants also direct and develop accounting information systems, while others use their expertise to uncover fraud as forensic accountants. In short, an accounting degree opens an array of career possibilities.

HOW TO KNOW WHICH PROGRAM IS RIGHT FOR YOU

Finding the right accounting program requires that you first consider your personal and professional goals. Like other college majors, accounting programs encompass a broad range of topics, and each university boasts its own features and areas of expertise.

Bookkeeper or Accountant?

There is often confusion about the difference between bookkeepers and accountants, but any business requires both bookkeeping and accounting. Bookkeeping is the foundation of accounting and while there is often an overlap between what bookkeepers and accountants do, it’s not a matter of one versus the other. Both have specialised experience and knowledge for the tasks they perform

What is the difference between Bookkeepers and Accountants?

Generally speaking, bookkeepers are across the business accounts on a more regular basis than accountants, as their job is to manage the day-to-day financial applications of the business. At the end of the financial year, they hand over a tidy set of accounts to the accountant.

Having a bookkeeper involved makes the job of an accountant a whole lot easier, as they take what the bookkeeper has done, make year-end adjustments for things like depreciation, FBT, home office expenses etc., and prepare tax returns and financial reports

Anything income tax or business structure related is usually the domain of an accountant. One of their responsibilities is to make sure you are meeting your tax obligations. They ensure that the business’s accounts accurately reflect the position of the business, and that you are claiming everything you are legally entitled to. They may also analyse the business’s financial reports, discuss with you its financial health and viability, and advise on how to improve business performance.

Many business owners love the business they are really good at and love what they do.  But, the bookkeeping side of their business often becomes a dreaded chore and is usually not the best use of their valuable time. In contrast, bookkeepers love keeping your books tidy and will do everything they can to lighten your load.  Plus, bookkeepers are much more efficient in processing data because that is their profession.

Ways to Make Bookkeeping Easier

When first starting a business, you’re asked to quickly absorb information on new topics and handle many tasks that you have probably never done before. And, unless you have previous experience with business financials, dealing with the economic side of a business will likely be new to you. With this in mind, we’ve put together tips to make the process simpler for you!

Keep Business and Personal Separate

Maintaining your businesses bookkeeping will be challenging enough without mingling your personal income and expenses. You need to keep your business receipts and invoices for five years, and sorting through a big pile trying to remember if that expense four months ago was personal or business is a waste of your valuable time. Establishing separate files, budgeting systems and bank accounts for your business expenses and income makes tracking and reporting much easier.

Choose the Right Bookkeeping Method for You

If your business is small enough, an Excel spreadsheet might meet your accounting needs for a while. But when your business begins to grow, you’ll need a more powerful solution. Accounting software can be a huge help by organizing your invoices, cataloguing receipts and generating the reports you need to make solid financial decisions with the click of a mouse.

And Keep up With It!

Bookkeeping is like any chore: the longer you procrastinate, the longer it takes to catch up. Unfortunately, ignoring that pile of statements and invoices won’t make them go away! Eventually, you’ll be forced to waste a day that you could be spending with friends or family entering numbers and sending late invoice reminders. Bookkeeping doesn’t have to be a daily chore, but don’t wait until the end of each quarter to pull all that data together.

Pick the Right Time

If you’re most productive and creative first thing in the morning, don’t use that time on your bookkeeping tasks. Determine a time of day or week when you can focus, but don’t need optimal brain function to work. That’s when you should catch up on your bookkeeping. Set this as an appointment in your schedule, and keep to it! If you’re finding this difficult, and that you are behind no matter what, it may be time to add a professional bookkeeper to your support team!

How to Choose a Payroll Service

Choosing the best payroll service for your needs can help you save you time and money. A good payroll service will pay employees and file and pay payroll taxes.

The only thing more conventional than “keeping the books” is screwing them up. In fact, the two typically go hand-in-hand, as the IRS penalizes about one out of every three business owners for payroll errors. Choosing the best payroll service for your needs can help you to reduce bookkeeping and other errors.

Even if mistakes weren’t so commonplace, doing your own payroll can still cost you. The valuable time and energy you spend figuring out how much money you have to give away could be spent actually making money.  That’s why so many businesses are turning to outsourced payroll services.

“One of my rules is if you have one employee, get a payroll service,” says Rhonda Abrams, president of the business services site The Planning Shop and author of the guidebook Hire Your First Employee. “The penalties for screwing up are so much more expensive than the cost for payroll.”

A good payroll service will, at the very least, get checks to both the IRS and your employees on time, taking most of the weight off your shoulders — but not all of it. The paychecks themselves may be out of your hands, but this is still sensitive information that’s immensely important to your company, so it’s critical that you pick the right service for your small business.

Tips for Choosing a Payroll Service

When payday rolls around employees automatically assume they will not only be paid but be paid the correct amount. An easy way to ensure everyone is receiving payment and the IRS is not on your back is to use a payroll service. Use these tips to evaluate and choose a payroll company to handle your small business needs

Recommendations:

One way to find a payroll service is to ask other small businesses for their recommendations. A recommendation from someone you know means that chances are they will be honest about their level of satisfaction with the company. Once you have a few services you are interested in ask if they can provide you with two or three references from clients who have businesses similar to your own. Recommendations are the best way to discover the reputation and quality of the firm.

Also find out how long the company has been in business, and check their reputation with the Better Business Bureau, as well as by searching online for the term, reviews, along with the name of the payroll company. These are important facts to know because ultimately it’s your company, not the payroll company that’s responsible for reporting and paying in payroll taxes. Should a payroll company you deal with fail to remit your payroll taxes to the government (and perhaps go out of business), you will have to pay the money owed to the government yourself, even though the payroll company took it out of your account

Prices and Hidden Fees:

The first question on everyone’s mind and the first question that need to be asked is: How much? They may charge a flat-fee with an additional charge per check or a charge based on the frequency of payroll. You may want to pay your employees every week but find that every other week will save you money. This is something that should be taken into consideration. Also, be sure to see a detailed breakdown of the bill to discover those hidden fees that some companies may “forget” to mention. For example simply changing an employee to direct deposit or adding a new employee might accrue additional charges. You may also want to ask if the charges and fees you were quoted are subject to change and if so, do they increase frequently?

Special Services:

In addition to paychecks, payroll services often offer other special services for businesses. These special services include direct deposit, customized reports, as well as the administering of employee benefits, retirement plans, and pre-tax deductions for medical insurance or childcare. Some companies are capable of developing customized software tailored to your specific needs. If you have employees in different states you must make sure the company has national coverage capabilities.

TIPS FOR CHOOSING A PAYROLL PROVIDER

Are you considering converting to a new payroll provider, but hesitant to make a change? You may be concerned about missing payroll periods or data errors during the transition, but it doesn’t have to be chaotic. The key to a successful payroll conversion is a streamlined conversion process that meets the unique needs of your company while minimizing the amount of work required to get started. When you’re ready to make the switch, here are six things to consider when choosing a payroll provider.

TIMING OF A PAYROLL CONVERSION

Deciding when to implement a new payroll solution is important. If you are considering a mid-year conversion, Quarter 2 is a good time to start the process. Another option is to convert at the end of the year. The ideal time to begin a year-end conversion is October so it doesn’t conflict with any year-end processing you need to handle.

DATA CONVERSION

When considering a conversion, it’s important to also look at whether the payroll system is unified with core HR and attendance. When payroll, core HR, and time tracking data are stored in a centralized database, this provides many benefits

Look for a provider who assigns a dedicated implementation manager with the experience to translate the differences in the systems and suggest improvements that will increase productivity, reduce the potential for errors, and drive down costs

DATA INTEGRATION CAPABILITIES

Many companies have existing business investments for benefits, such as general ledger software, point-of-sale (POS) systems, and retirement packages. The ability to integrate these existing systems with an online payroll system is a huge benefit as all of the data is accurate and up-to-date.

How to Choose the Right Payroll Service

Consider factors like cost, features, ease of use, and more as you shop for a payroll system. Running payroll might not be your forte, but it’s a necessary part of being an employer. To ease your responsibilities, you could try a payroll service, a type of software as a service (SaaS).

How much do I know about payroll?

If you aren’t a payroll expert, you need an easy-to-use software solution. Payroll software automates a complex process, and the point of automation is to free your time, not take it up.

Which basic features should a payroll software have?

First, let’s go over the key parts of running payroll. Running payroll is the process of entering the hours employees worked during a pay period, calculating their gross wages, determining deductions, and giving employees their net pay.

Payroll software saves you from manually running payroll. Here are a few basic features you should keep an eye out for when shopping for payroll software:

Taxes: Payroll software automatically withholds taxes from each employee’s paychecks. If you want the software to go a step farther and file taxes for you, opt for a full-service payroll software.

Accuracy: Mistakes on payroll result in penalties for your business. Find a provider that guarantees accuracy.

Multiple payment options: If you want the option of paying employees with direct deposit or paychecks, find a provider that accommodates both and offers free direct deposit. According to the National Automated Clearing House Association(link is external) (NACHA), 82% of workers receive their wages via direct deposit, so try to offer this payment method.

Time and attendance integration: Some software providers offer a time and attendance add-on to help with attendance management. This lets employees enter the hours they worked. All you need to do is approve their hours.

How much do I want to spend?

Deciding how much to spend on payroll is challenging since many factors go into the cost. To get started, learn what other businesses spend on payroll services.

Considerations to Make While Choosing A Payroll Service

Determining how to choose a payroll service for your business can be difficult. There are many payroll software providers and features from which you can choose. Whether this is your first time looking for payroll software or you want to switch software programs, you need to know what to consider. Knowing what to look for in a payroll service can help you make a good purchase.

What will you find in this guide about how to choose a payroll service?

Our guide includes 10 points you should consider while choosing a payroll software solution. A few of the points you can learn about in this guide include types of payroll software, software costs, and software security.

In each of the 10 sections, we provide you with a list of questions to ask yourself. The questions are helpful tools to assist you in thinking about your needs and what type of software will work best for your business.

At the end of the guide, there are related articles about small business payroll service options. You can use the articles to further your learning and improve your business’s payroll program

When you download and read our guide to choosing payroll software, you can prevent a bad payroll software decision. You don’t want to be locked into a contract or discover hidden fees for the features you need. You should purchase payroll software that you like on the first try.