After a lot of research, we have found the best online payroll preparation service for small businesses:

Intuit offers everything from paychecks to W-2 forms to automatically generating reports.

What You Get With Intuit:

• Unlimited Payroll Runs
• Complete Payroll Management
• One Click Tax Filings
• Free Direct Deposit
• Contractor Payment Support
• Submit payroll by phone, fax, or online.
• Talk to a dedicated, local Payroll Specialist to help keep your payroll running smoothly.
• Take advantage of direct deposit.
• Access over 40 reports!

It can be a challenging task to find the best payroll preparation service for your small business. Keeping track of employee hours, tax information, and finally paying your employees is part of your business and you need this task to be as easy as possible. It is also important that these tasks: paying employees, W-2 forms, and writing paychecks, etc, is quick and painless.

The best payroll preparation services should allow you total control over your business finances and that’s exactly what Intuit does for you.

Intuit vs. Other Payroll Preparation Services When comparing payroll preparation services, there is no comparison when it comes to the services of Intuit. They offer the most benefit and least amount of work for you, and the cost is the lowest in the industry.

Other Benefits of Intuit:

• Payroll Tax Administration
  Calculates liabilities, makes tax deposits, and files your returns.
• Workers’ Compensation
  Calculates workers’ comp costs as you go, helping avoid year-end surprises.
• 401(k) and Retirement Services
  Helps you choose a retirement plan and meet recordkeeping requirements.
• Health Insurance
  Affordable group rates through partnerships with over 150 carriers.
• Time and Labor Solutions
  Includes a complete time and attendance system to help maximize your payroll productivity.
• HR Outsourcing Solutions
  Helps you take control of HR functions, and helps keep your business in compliance.
• And More!

Intuit Online Payroll Easy to Setup and Use. Try Now FREE for 30 Days!

Payroll Services Quote

The do-it-yourself method of simplifying the payroll process is just a matter of knowing your facts.  Research the laws, teach yourself the techniques, and realize that the time you spend now working on learning this will save you time later.  There is a lot more to doing payroll than just writing a check.

If you decide to contract out with a payroll preparation service, you will definitely save yourself some time.  This may not be the best option for your business, however, so you will need to weigh the pros and cons of outsourcing.  Obviously, you will want to make the informed choice that will profit your company the most.

The last way to manage your payroll easier would be to do a mixture of outsourcing and in-house processing.  Some of the more complicated processes that eat up the majority of your time, like paying payroll taxes or making records, can be managed by the experts.  Simply handle the less complex portions right at your business and let the payroll preparation service take care of the rest.

No matter which path you choose to take, you’ll have to be sure you have complete records for your employees.  Records you should keep will include the basics like their name and address, and also completed forms such as their I-9 and W-4 forms.  It’s a good idea to keep a checklist in the front of their folder to make sure you have compiled all the necessary forms.

Most likely, your employees won’t know how to fill out all the forms.  This fact makes it essential to keep a cheat sheet with the form that will instruct the employee how to answer the questions.  You will also need to double check the answers they give to make sure the information was entered correctly.  It isn’t your job to make sure your employee has the right withholdings down but you are responsible for making sure they have the information they need to fill out the form.

Also, in order to be certain that your business is keeping strict IRS rules, be sure to classify your employees correctly.  If you put your employee down as an independent contractor, you are saying they a person who decides for themselves when they want to work and how they will go about doing their job.  This is not the same as an employee, and you don’t want to illegally classify your employees just to avoid paying the employee’s payroll taxes.

There are high fines that can result from incorrectly categorizing your employees.  Before you pay your employees, figure out whether they are an employee that you must take care of payroll taxes for, or it they are a private contractor. A private contractor will take care of paying their own payroll taxes.  Make a list of questions that will help you pinpoint which one of these categories your worker should be in.

It’s generally a good rule of thumb to know what you are getting into before you start a new business.  That way, you can steer clear of the fines that come from breaking laws, whether you mean to or not.  Regardless of whether you use a payroll preparation service or do your own payroll, make sure that you have all the necessary information in place for your employees and that you record their information properly.  If you have all your information together you can automatically make your payroll easier.

Regardless of your company’s size, having a payroll service enables you to have the time necessary to invest in expanding your business.  You can rest assured that all your requests will be handled carefully by expert personnel familiar with all the laws and regulations associated with payroll procedures.

Keep in mind that the best company to process your payroll is the one that meets all of your requirements, will take responsibility if they goof something up, and is convenient to use and correspond with.  There are many different services out there but if you know what to look for ahead of time, your search will be much more productive.  Discussed below are three factors that will reflect the quality of the payroll preparation service you choose.

Finding The Best Payroll Preparation Service

First, the payroll service bureau you decide on should hold themselves accountable if they mess something up.  Any inaccuracy on their part will incur fines for your company, whether it’s because something was processed late or because of some other error.  The company you pick must guarantee to take care of any fees or penalties that are a result of their mistakes.

Second, any payroll bureau worth your time will have a nationwide clientele.  All reputable payroll services will be able to function for you from any part of the United States.  It won’t make a difference if the service has an office nearby as long as they have a national reach.

Third, the best payroll preparation service will be accessible to the internet.  Using the service online will enable you to enter information into a system any time you need to, rather than only while the business is open.  The online setup will also give you the freedom to check over and regulate your payroll as much as you like, wherever is convenient for you.

Finding a payroll service doesn’t have to be a hassle.  Once the service knows what you need and meets your stipulations, they will make your payroll headaches go away.  If the company does not give you the respect and accuracy you deserve, keep these tips in mind and simply switch to another payroll preparation service that meets your needs.

- You as the owner can do it yourself – There is a learning curve

- You can pay someone or another company to do ALL of your payroll needs

- You can do the easy parts, and outsource to a payroll preparation service for things like filing taxes, W-2 Forms, and payroll reports.

It’s up to you to choose which of these options is best for you.  If you don’t have a background in payroll and have never done it before, you should outsource all of your payroll first to a payroll preparation service and see how things are done correctly.  Once you are secure with some little things like cutting a paycheck or filing tax forms, you can always do that yourself.

An online payroll preparation service is the best way to control all aspects of your payroll including taxes, writing checks, filing forms, and creating reports.

One of the most respected online payroll services is Pay Cycle.  They handle the ins and outs of everything related to payroll and make it easy for you to do things so you are in control.  They offer things like email reminders, ability to direct deposit checks and cut checks automatically.  They also file forms and generate reports with ease.

The best part about Pay Cycle online payroll preparation services is that there is no software to download or anything to learn.  Everything you need is based online and has the most secure network available so all your information is safe.

You can try Pay Cycle and watch the demo video here

First, research the software supplier to make sure they guarantee their product.  Guarantees give you confidence that the software will work well.  A lot of companies will also let you use the software for a while without charge.  This allows you the opportunity to know for certain that the product will satisfy your business needs without wasting money on something that doesn’t.

You will also want to know whether or not there is technical support for the product—service personnel ready to answer any questions you may come across while using or setting up the software.  A good supplier will more than likely also have on-site or even online tutorials you can use as educational tools for you and your employees.  In the event that telephone support is limited, find out if you can receive support using the internet.

The right payroll preparation service will be upgradeable as your business grows.  In the long run, a service that you can upgrade will save you money.  You will be able to just purchase advanced equipment to get the desired effect, rather than having to buy an entire new software system.

Next, get software that enables you to not only process your payroll, but also allows you to file your taxes.  Good software will have this option available.  Filing taxes within the same system will be a convenience that will save you a lot of time entering data or transferring your information to an outside source.

Also, be sure to purchase a software program that works with your computer.  For example, if you have a Mac system, check to see if the programs are compatible.  Call the supplier with any questions you have regarding the installation process, especially if you are not positive it will work with your system.

Finally, the best supplier will be both well established and respected.  If you purchase a product from an inexperienced seller you are taking a chance that the software will not be very high in quality.  A reputable supplier will be better able to handle any support that you need in relation to the equipment and will give you quicker service.

When you look on the internet, you will see all kinds of payroll software with many different features.  Pick the software that includes all of the features necessary for your business.  If you don’t need certain features, don’t get them, and if you aren’t completely positive if the software you are considering is right for you, just ask a fellow business person or friend what they would recommend.  Your friend’s advice, along with these important things to look for, will enable you to find the best payroll preparation service software for your business.

1. Outsourcing Your Small Business Payroll is More Cost Effective

If a small business owner uses a certified public accountant (CPA) to perform in-house payroll processing, costs could be anywhere between $260 and $480 per payroll run –not per month, but each time payroll is run.

For in-house payroll processing, using a CPA is the best way for having your payroll done correctly because CPAs are specially trained in accounting and payroll procedures. However, CPAs charge between $65 and $120 per hour and at approximately 4 hours per payroll processing run, the cost can be quite substantial. And if your small business runs payroll bi-weekly or weekly, you’ll double or even quadruple this amount. Even without a business degree, everyone knows that the lower your expenses are, the quicker you can become a profitable small business owner.

Outsourcing your small business payroll can give you all the benefits and accuracy of having a CPA do your payroll, but will run you at a fraction of the cost. It’s the best of both worlds; easy, accurate, and cost effective. Outsourced payroll can save you thousands of dollars per year.

So how much can you really save? Let’s compare how much it would cost for Small Business Inc. to run payroll for its four employees once a month. Just to be conservative, we’ll use $65 per hour to estimate the traditional in-house payroll cost –the low end per hour cost for a CPA.

Outsourced Small Business Payroll

Base price of $44.95 per payroll run + $1.85 per employee = $52.35

[$44.95 + ($1.85 x 4)]

Traditional In-house Small Business Payroll

Four hours at $65 per hour = $260

Outsourcing payroll saves Small Business Inc. $207.65 per month.

2. Outsourced Payroll Helps Small Business Owners Avoid IRS Penalties

So what happens if you can’t afford a CPA and you decide to try your hand at calculating, paying, and filings your own small business payroll? Because of the complexity and ever changing payroll laws, it’s easy to make mistakes.

Each year, approximately 40% of small business owners are penalized by the IRS for paying or filing their payroll taxes incorrectly. That’s a pretty high percentage, and at approximately $850 a year in penalties, doing your own small business payroll processing might not be as cost effective as if you had a specialist do it for you. Payroll outsourcing companies such as Online Business Payroll automatically calculates, pays, and files your small business payroll taxes for you. Because of the automated process, you’ll never be late or miss a payment or filing.

3. Outsourced Payroll is Easy

Payroll processing done through an outsourced small business payroll service is easy to use. Although setting up your employees could take a few minutes, the actual payroll run can be done in just a few minutes.

Just log into your outsourced payroll service’s secure online portal and enter in the hours each employee worked during the pay period. After you enter in your employees’ hours, review the information, and click submit. Your payroll is done.

4. Outsourced Payroll Takes Care of W-2 and 1099 Forms for You

At the end of the year, small business owners must give their employees either a W-2 form or a 1099 form by January 31st of the following year. W-2s are forms that let employees know how much money they earned as well as how much federal, state, and local taxes were withheld during the year. Form 1099 is for independent contractors who you paid more than $600 to during the year.

Not only do you need to give these forms to your employees and independent contractors, but you also have to file certain forms with the IRS. Again, if you don’t know what you’re doing, this could cost you in IRS penalties.

Outsourced payroll companies keep track of this information and file it for you. At paperless companies such as Online Business Payroll, small business owners can print W-2s and 1099 forms for their employees right on the spot. Small business owners are able to get tax forms to their employees faster by being able to print these documents for them, rather than employees waiting for their tax forms to arrive in the mail.

5. Outsourcing Payroll Services Let You Maintain Control

Most outsource payroll services, allow you to maintain control over your payroll while taking care of the tough payroll tax calculations in the background. Outsourcing your payroll is a beneficial relationship because it allows you to stay in compliance with tax laws, but also allows you to focus on your business instead of trying to become an expert in payroll processing.

Entering your payroll information online allows for you to maintain control of your payroll processing and helps eliminate double entries or typing mistakes often associated with calling or faxing in your payroll information to a customer representative. You enter it, you review it, you approve it –you’re always in control of your small business payroll processing.

6. First Month Free

The best thing about using an outsourced payroll service is a lot of companies allow you to try their service for free. You have nothing to lose, why not give outsourcing a try.

Employers look at what the job entails, what competitors are offering for similar work roles and the abundance or lack of in the relevant skills. For new businesses this process is more straightforward but for established employers, it is slightly more complex. Existing employees set a precedent with their pay rates and therefore creates less flexibility to agree a pay rate different from one already given to current payroll employees in the same or similar job roles.

Established employers recruiting new payroll staff, does provide an opportunity to review pay rates generally. It is not always simple to stick to the rates currently being paid to existing employees, as external factors, such as shortages of skills in specific areas, can have an effect on rates of pay. Employers unaware of this issue can face difficulties in recruiting new employees, but may also suffer when current employees become attracted by higher rates of pay elsewhere.

An employer must decide where they want to position the business and the rates of pay being offered. To attract the best payroll employees, employers may wish to pay a ‘top of the market’ rate. At the other end of the scale, employers who are unwilling or unable to pay premium rates may have to compromise on the calibre of employees they recruit.

The law requires employers to pay a fair and equal rate of pay for equal jobs, regardless of who is doing them. The National Minimum Wage is a standard minimum amount prescribed by law and is the lowest amount an employer is allowed to pay to any employee. There are three rates of the National Minimum Wage in force from 1st October 2009.

• £5.80 per hour, for those aged 22 or more
• £4.83 per hour, for those aged 18 – 21 inclusive

Apprentices aged 19 and above qualify for the National Minimum Wage after the first 12 months of their apprenticeship.

• £3.57 per hour for 16 and 17 year olds (above compulsory school leaving age)

16 and 17 year old apprentices are not entitled to this rate.

The minimum wage figures are reviewed and updated regularly by the government. Failure to pay the minimum rate is a criminal offence.

What the Law says

There are key regulations that you should be familiar with, which lay down rules regarding how much you pay your workforce, as follows:-

• National Minimum Wage – minimum rates you can pay your employees.
• Equal Pay Act – states how men and women are to be paid an equal rate for the same and similar roles.
• Part-time Workers Regulations – part-time workers doing the same or similar jobs as their full time colleagues should be paid the same rates based on the number of hours worked pro rata.
• Fixed-term Regulations –fixed-term employees total pay package must be the equivalent to that paid to comparable permanent employees in monetary terms.
• Employment Equality (Age) Regulations 2006 – discrimination on the grounds of age is unlawful. Pay and benefits schemes, are potentially discriminatory on the grounds of age if based on the length of service. Limiting pay and/or benefits schemes to 5 years’ service would enable employers to operate fairly. Reward schemes based on length of service of more than 5 years must be objectively justified.

Under HM Revenue and Customs rules, employers have other legal duties regarding pay such as the deductions of tax and NI. These deductions must be paid directly to HM Revenue and Customs on behalf of the payroll employee. The employer is then required to provide each employee with a written statement or payslip at the time of paying staff to indicate the gross pay, deductions of tax and National Insurance, fixed deductions (e.g. loan repayments or Trade Union subs) and net pay total.

Only in certain circumstances are employers entitled to make other deductions from pay:-

• Where written authorisation from the employee has been given prior
• If employee’s contract of employment has a clause that allows the employer to make deductions
• A Court order, e.g. an attachment of earnings order

Our advice to you.

An employee’s pay rate is a term of employment which by law must be specified in the terms and conditions of the written statement of employment, given to employees within their first 2 months of starting. When an employee receives a pay rise or is promoted or a change in role occurs, the pay rate may be renegotiated.

Individual employees can undertake very different roles from one another and therefore require different pay rates. However, when a number of employees perform the same or similar roles, pay should be made on an equal terms. To pay different rates to different people based on gender or employment status is discrimination and unlawful. There are some important age exceptions to this provision as described above.

Regularly review your rates of pay to help you attract and retain good payroll employees. It will ensure that differences do not arise in the rates given to employees doing the same or similar jobs or highlight areas where this has occurred. There are circumstances where differences in pay rates legitimately do occur, e.g. where an employee’s job role demands a higher level of skill or competency. In these instances, make sure you can justify the differences in pay. Reasons for pay differences must be objective, measurable and noted down, helping you avoid potential claims of discrimination. You must be able to demonstrate that the differences are due to reasons other than age or gender.