The Marketing MacGuffins have been a fully remote business since the pandemic. They intended to go back to the office once things got back to “normal,” but the appeal of a country-wide candidate pool won over the leadership team when staff turnover spiked a year later. This turned out to be a great move to build an A-list team which has landed them in an elite circle of nationally-acclaimed marketing agencies. Business is good!
But then…a letter came in the mail from the State of Kentucky. Someone dropped the ball and forgot to file the payroll tax return in the Bluegrass State. In addition to still being required to submit the taxes, the Marketing MacGuffins are being charged a penalty for delinquency.
Managing payroll manually was just fine when the Marketing MacGuffins were a local, debut agency. Now that they’ve had a few big breaks and are attracting talent from around the country to work remotely, they are in over their heads when it comes to payroll management and taxes.
Did you know that you have to file state payroll taxes in every state where an employee resides? You may also need to do so for each county and city, each jurisdiction assigning your business a separate ID. The mountain of pre-hire, ongoing, and post-termination paperwork you have to file to stay compliant with all of the payroll rules and regulations and taxes across the country is enough to cause brain damage to even the most well-trained payroll specialist. It’s just too much.
If you are still manually managing your payroll, it’s time to upgrade to using payroll software. It’s relatively inexpensive and the benefits far outweigh the cost. You’ll save time, avoid errors and missed deadlines, and keep employee brain damage at bay. I’d love to help you assess your financial situation and provide a few payroll software options that make sense for your unique circumstances. Schedule a consultation with me today to get started.
What are the advantages and disadvantages of payroll software?
If you have been manually running payroll, you may be wondering “what is payroll software, anyway?” Payroll software is a great tool for automating routine tasks like processing direct deposits for your employees, generating reports, and filing and remitting taxes.
For service-based businesses, like Marketing MacGuffins, payroll is their largest expense. Keep a close eye out for options to minimize this required expense. Paying for payroll software might seem like an added, unnecessary cost, but it’s worth every penny…and more affordable than you might think!
The cost of payroll software is one of its appealing benefits. It’s so cheap (maybe $50 per month plus $5 per employee in 2025) that every business should be using it.
The cost of payroll software isn’t its only advantage. Here’s a quick list of payroll software benefits:
- It’s generally easy and intuitive to use.
- It prevents costly mistakes.
- It ensures you are compliant with tax requirements across the gamut of jurisdictions in which you have to file. Some even help you with compliance with labor laws.
- There are lots of options out there for you to choose from.
- It prevents additional brain damage for your poor employee who has been doing it manually all this time… (I don’t wish manual multi-jurisdiction payroll paperwork on my worst enemy – it’s that bad!)
What payroll software is best for my business?
Three of the big players in the payroll software industry are ADP, Paychex, Gusto. Each company offers different package levels (such as basic, plus, and premium), so it’s important that you read the fine print before choosing a plan so that you know exactly what you are paying for.
Pro tip: Preparing and filing a payroll tax return are two very different things! If the plan says it “prepares” but does not specify that it “files,” then you will still have to (at a minimum) push a button by the deadline to file the returns. This is an easy thing to forget to do.
Before you make your decision, do your research to find the most efficient and cheapest payroll option for your business.
Here are a few questions to ask when evaluating payroll software options:
- Will it withhold/remit tax payments to jurisdictions automatically?
- Will it withhold/remit net pay using direct deposit to employees automatically?
- What happens automatically and what do you still have to do manually?
- Pro Tip: Remember to keep a close eye on tax return filing here. And set up a recurring reminder on more than one calendar to manually push the button if it’s not automatic.
- Do they charge a fee per month or per payroll run?
- Pro Tip: This adds up to very different costs depending on the software structure and your pay schedule (monthly vs. weekly).
- How well can employees update and manage their own information? (For example, can they update their address and 401(k) contribution themselves or does someone have to do it for them?)
- Pro Tip: Software that is built to empower employees to manage their information themselves reduces the workload of your payroll employee.
- Does it automatically sync with your time keeping and general ledger software?
You can also consider outsourcing your payroll processing to a contractor, but they will still require a bit of hand holding as they regularly extract information from you: time cards, vacations taken, changes in W-4 withholding rates, just to name a few. Plus, I am 99% certain they will use payroll software to do it. It may be cheaper and more efficient for you to train an employee to use the software than to outsource the task.
You’ll need to weigh the pros and cons of each option and choose the solution that is best for you and your business.
Pro tip: Some might argue that it’s cheaper to have an employee manage payroll manually than to pay for the software. In my professional opinion, that’s bologna. If you add up all the time it takes for an employee to do this manually, there is no way it will be cheaper. Plus, you are at a much higher risk for errors, late fees, and missed deadlines (not to mention employee brain damage) if you stick with a manual process. The hidden costs of those mistakes alone will save you money.
Need help choosing a payroll software?
I recommend that every business use payroll software and automate as much as possible to stay compliant. Unfortunately, there may not be a software that does everything you need; so which do you choose? That’s where I can help. I can look at your financial situation, provide the best options, and help you decide which software makes sense. Schedule a consultation with me today and take the first step towards simplifying your payroll!
