Managing your own payroll may seem like a way to cut costs, but is it worth it? It seems easy to pay your employees based on the hours they worked.
However, what appears to be an uncomplicated math problem deserves a closer look when you realize the many decisions you must make as a business owner—and how costly mistakes can be. Here are a few factors to consider:
Classifying Employees
Before you can pay your employees, you must correctly identify what type of employee they are. There are three main types:
- Hourly workers
- Independent contractors
- Salaried employees
From there, you can decide on a pay grade, but this first step is crucial in ensuring you are not underpaying or overpaying. You can also avoid the mistake of not withholding the correct amount of taxes, which leads us to the next important element of setting up payroll.
Understanding Taxes
This is where things can get complicated. If you are managing your own payroll, you will need to have a basic understanding of both how much you need to withhold for taxes for your employees and what amount you will need to pay in taxes. Keep in mind you must consider both state and federal taxes, and you will need to make the correct deductions from salaries, calculate pre- and post-tax deductions, and account for taxable benefits like bonuses. If that sounds like a lot of details, that’s because it is. Unless you specialize in taxes and accounting, these are processes that are not familiar and fall outside your skillset, costing you extra time, stress, and money.
Choosing When to Outsource
Depending on how large your business is and how many employees you have working for you, calculating payroll could be taking up large chunks of your time. As a business owner, your time is valuable. Your unique skills and expertise have built your business, and your time is best spent doing what you, and only you can do. As time management expert Laura Vanderkam points out, “time spent doing one thing is time not spent doing something else, and sometimes that something else really needs to come first.” Part of choosing whether outsourcing makes sense is evaluating the value of your time and whether dealing with payroll is really how you would like to spend that time. If you find that it brings you too much stress and dread, and if you have the money, it makes the most sense to give someone else that responsibility. You are then free to focus on doing what you excel at.
Leaving it to the Experts at B&B Bookkeeping
Fortunately, we excel at bookkeeping here at B&B Bookkeeping. Hiring bookkeepers is more affordable than you might think. Take a look at our tiered pricing, and you will see that our low monthly fee is well worth your own hourly rate, making managing your own payroll a thing of the past. We take care of all your books using cloud-based Quickbooks™ software that syncs daily. Rather than poring over tax regulations, we manage everything for you, checking in and requesting information as needed.
Contact us for a free one month trial, and see what a difference we can make for your Salt Lake City business.
