Online Accountant - Where Can You Go Wrong?

A lot of times, business owners run to an online accountant whenever they can no longer manage the financial operations of their business on their own. They would possibly look for one too if they don't know anything that's related to business accounting. Yet there are others who fail, by picking the wrong online accountant for them. Thus, they aren't only wasting their money on someone, but they are also jeopardizing the success of their entire business.

It's perhaps high time that you get to know the common mistakes you may encounter while you're in the process of searching for your online accountant. Make sure that you avoid all of them, to ensure that you can get the most appropriate one for you:

1. Looking for an online accountant at the wrong places. You will have greater success of finding an online accountant when you look for them in CPA firms and stable outsourcing companies that offer one. You are assured that this individual has been carefully screened and chosen based on his experience, knowledge, and expertise in his profession. On the other hand, you will likely fail if you try looking for them in friends and relatives who don't have close connection to the accounting and finance world.

2. Online accountant lacks qualifications. In truth, it's only you who can actually define the qualifications for your online accountant. Nevertheless, it's important that who you search for will have the knowledge about the subject matter. This means that he should have an accounting degree. Furthermore, he must have the experience to speak of. Usually, accountants would have to spend as long as 2 to 3 years, before you can be fully confident of their skills. There's nothing wrong in getting someone fresh from the university, but if you have plans of expanding your business or you don't have much time training him, then you should pick somebody with both skills and experience.

3. No proper resume or credentials. There are some businesspersons who skip looking at the resume and credentials of their online accountant. After all, for them it doesn't really add too much weight for their choice. However, skimming through their credentials will give you a good idea about their working experience, track record, and how well they do in their previous jobs. You could be meeting a virtual accountant with experience, but is often fired or forced to resign from his job because of his attitude or work performance. You basically don't want him to be part of your team.

4. Virtual accountant could fit the job. You have to think about the nature of your business, when you're searching for an virtual accountant. This is because you have to have someone who understands your business area. This way, you are guaranteed that there will be no or less mistakes in the way he treats financial transactions of your business. If you can't find one, then just ensure that he immediately understands the nature of your enterprise and applies the necessary and appropriate accounting methods.

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Payroll Solutions - A Contractors Guide

Sometimes there is more to a Payment solution than meets the eye!
IR35 has added to the complexity of taxation legislation and forced many more contractors to seek specialist tax advice. Unfortunately, a lot of this advice can be misleading, offering short-term gains with high risks.

HM Revenue & Customs (HMRC) are actively investigating some of the practices used by contractors to minimise their tax payments (tax avoidance) and may well examine each of your contracts individually rather than take your earnings as a whole. Therefore, as a contractor you need to be very careful when you choose your payment solution.

Pay as You Earn (PAYE)

Avoids the entire IR35 headache and is the HMRC compliant standard. The PAYE system is a method of paying income tax. Your employer deducts tax from your wages or occupational pension before paying you your wages. Wages includes sick pay and maternity pay.

This means that you pay tax over the whole year, each time you are paid. Your employer is responsible for sending the tax on to HM Revenue and Customs (HMRC).

Contractors that work through an employment agency and receive all income via PAYE
Agencies, only pay a reduced rate as they still have to pay out National Insurance, holiday and sick pay costs, together with the additional administrative burden of running a payroll and complying with current employment legislation.

Personal Service Companies (PSC) / Limited Companies

PSC's are commonly one man bands, processing income as part salary and dividend payments. In the past, contractors used this method to exploit tax loopholes and improve tax efficiency. Contractors set up a limited company and pay themselves via a minimum wage and dividends.

However, this method is now classed as risky because:

Contracts inside IR35 dividend payments are simply NOT viable anymore.
HMRC view minimum wage/dividend options as tax avoidance and may impose PAYE.
If there is no "goodwill" in the company, a contractor may be seen as receiving "disproportionate return on initial investment" and dividend will be taxable as PAYE.
(according to section 447 of the ITEPA, 2003)

Outside IR35: if a dividend payment takes a contractor over the 40% tax threshold they will face an end of year tax liability.

You will find many agencies and clients will not allow you to use this method until you've had your employment contract reviewed by a IR35 specialist, which can cost upwards of £150 per contract assessed.

Umbrella Company

An umbrella company acts as employer to independent contractors who work under a temporary contract, usually through an employment agency.

Since the introduction of the Managed Service Company (MSC) legislation in the budget 2007, the only way an independent contractor can comply with this requirement is to set up his or her own personal limited company or use an umbrella company.

An umbrella company issues invoices to the recruitment agency (or client) and, when payment of the invoice is made, will typically pay the contractor through PAYE (although historically the term has also been used for salary and dividend type payment structures).

Umbrella Companies are fast becoming both the choice for both contractors and agencies alike:

-Company pays the contractor via PAYE on the total contract sum and uses a HMRC approved dispensation to offset business expenses.

-IR35 is irrelevant as all income is paid as PAYE.

Composite Companies

There is no legal or tax law definition of the word "composite company". However, this term is commonly used in the context of service providing companies to the contracting industry.

The word "composite" means "made up of various parts" and in the context of contractors, is represented as a service providing company, through which many contractors place their contracts.

A mixture of salary & dividend payments now, could be viewed as blatant "tax evasion" by the HMRC, according to section 447 ITEPA, 2003:

-Company provides administrative services, invoicing and receiving payment for work carried out - eases burden for contractor.

-Contractor paid a small salary plus expenses, remaining income paid via dividends.

Popular in the past, this option was viewed by the government as 'tax avoidance'. New legislation introduced in the budget 2007 means that it's now looked upon as blatant 'tax evasion' for workers Inside IR35.

If you are deemed employed, this option should no longer be pursued.

Employee Benefit Trusts (EBTs)

Once an attractive option, the 2002 Pre-Budget Report announced immediate legislation to counter the avoidance of Tax and National Insurance contributions (NICs) through the abuse of EBTs.

Contractor works under company receiving basic salary, usually 20-30% of contract value, with balance paid into an offshore trust from where it is loaned back to the contractor.

Loan is in foreign currency so avoids IR35, taxation and NI.

HMRC has now closed the loophole on this scheme and EBTs can no longer operate.

Tax relief is now only allowed on PAYE payments made by the trusts, i.e. the lower salary figure, and not on loan.

The HMRC Anti-Avoidance Group has set up a team to project manage these cases to ensure that the tax outstanding is collected systematically and consistently.

Foreign Loans

Foreign loans are a legal means of "avoiding" Tax and National Insurance, however Gordon Brown announced in his budget on 17th March 2004 the intention to introduce a scheme which will force any Company setting up and marketing "tax avoidance schemes", to register with the HMRC.

As with most tax law, the measures are not at all clear. For example who defines "the obtaining of a tax advantage"? Presumably anything we do which does not involve us paying the highest amount of tax possible could be covered by this? The penalties for not registering or notifying will be up to £600 per DAY.

-Loans made to contractors in foreign currencies and repaid (often at very low rate).
-Must be operated in conjunction with an offshore company, not taxed on profits.
-Offshore companies are scrutinized by HMRC and all dealings would be challenged and taxed as income if received by a UK resident.

In short, this tax avoidance scheme is under so much scrutiny that for the average contractor the hassle and risks involved are just not viable.

Offshore Schemes

Offshore schemes are classified as any financial setup where income is moved outside the UK to avoid paying the host countries rate of Tax and National Insurance contributions. Payments are usually made as distributions, loans and dividends.

The Inland Revenue's Special Compliance Office is gearing up for a crackdown on offshore umbrella companies and other tax avoidance schemes designed for solo contractors caught by the unpopular IR35 legislation.

The HMRC have warned contractors not to rely on schemes they have developed to get around IR35, as they could crumble when examined.

All income generated in the UK by a UK resident must be declared - whether received or not - and is subject to IR35 criteria and taxation.

HM Revenue & Customs now have power to view details of around 100,000 UK-domiciled clients of Offshore Schemes.

Investors with undeclared offshore accounts are being urged to come forward and HMRC is proposing to offer reduced penalties for a limited period, although investors will still have to pay their tax bill plus interest for up to 20 years.

An offshore account is a high risk option.

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Stop Time Leakage And Save A Fortune

Let's say you have 100 workers - employees or subcontractors being paid an average of €25 per hour. And let's say each one works 48 weeks per year and that each one of them loses a very conservative one hour per week based on a forty hour week.

That would be a loss of €120,000 per year, not to mention the opportunity cost of 4,800 billable hours that you could have billed elsewhere. If you then add to this the time taken by the foreman and administrator managing timesheets, it's hard not to agree that - for every 100 workers - you could be losing more than €150,000 through time leakage!. This equates to >2.5% of the annual labour cost. In an industry where there is often a 50/50 split between labour/materials and where net margins average 5%, 2.5% saving on labour would add 1.25% to your nett margin.

I'm not going to tell you that you can save that much or more - only you know how the figures add up for you, but I wonder what happens when you imagine yourself saving a small fortune?

TIME LEAKAGE - MONEY DOWN THE DRAIN

Let's take a quick look at what time leakage is and how it happens. Time leakage is jargon for 'time lost', and there are many factors that contribute to it, including:

• Manually filling out time sheets

• Faulty short-term memory - when filling out a timesheet at the end of the week. People's memories seem to err on the side of additional time

• Foreman review and sign off of timesheets

• Transport of timesheets to head office from remote sites

• Administrators -

- entering time into payroll systems

- reviewing timesheets

- calling individuals and foreman to validate before finally signing off

• Reconciling timesheets with trips to the dentist, sick time, holidays and other absences

• Time recorded on site but not actually spent on the site

I wonder if you are a main contractor with many sub-contractors on a site and whether some of the causes of time leakage may currently be beyond your control. Or, if you're a sub-contractor, how some of these problems may be beyond your control as it may be that you don't always have your own foreman on site or you can't spend time on the site yourself as you have too many sites.

In either case, considerable amounts of money leak away with lost labour time.

In an environment where people and sites are transient, it's fair to ask:

• Can this problem be solved?

• How can I solve this problem?

• How do I stop the leakage and save money?

When you think about it, it becomes clear that a solution would have to include the following capabilities -

• Accurately track people entering and leaving sites

• Cater for sites of all sizes

• Communicate with head office automatically

• Track clock-ins - in real time

• Integrate data to payroll systems

• Be reliable, robust and scalable

Surely, the technology exists... so why is providing this solution still such a challenge in the construction industry? Primarily for this reason: One size does not fit all.

At least, not until now.

Consider this: A business may be characterised by small numbers of people (1 to 5) going to many customer sites or by large numbers of people working on small number of sites. A business may have small sites or large sites. You may be a subcontractor or a main contractor that simply wants to control labour costs, or you could be a project management company tasked with controlling labour costs. You get the picture.

And you may already be aware that, thanks to advances in technology, all these disparate requirements can now be solved with a single solution.

YOU CAN CONTROL LABOUR COSTS ON CONSTRUCTION NOW

Experience shows that the key to how you can accomplish this is the front-end flexibility that allows multiple and differing requirements to be integrated to a single back-end application. And what if it also provided both main contractors and sub-contractors a single solution while still allowing you to be in control of your own labour data?

I'm not going to say that when you have the ability to gather (in multiple ways) accurate data in the field that integrates the information with the head office, you have the problem solved, because you'll know that when you experience the savings for yourself.

• Large and small sites scan in using biometric devices that return data to the application in real time over the Internet or over the mobile network. No phone lines or broadband required. Such hardware can be easily moved from site to site.

• Individuals travelling to multiple sites can clock-in using IVR (Interactive voice response) or using their mobile device.

Because each method communicates with a central system at head office (ideally a web-based solution that is visible securely anywhere you have internet access), which means that head office gets a complete, real-time, integrated solution that gives you control to end labour leakage, you can start saving a small fortune.

As technology advances you will see the construction industry change, and while some companies will wait until forced to change to stay in the game, others will take advantage of the opportunity to evolve, to get the competitive edge now and put an end to 'wasted time'.

Because this solution has only recently become possible - with the convergence of improvements in biometric technologies, mobile networks, voice over the internet, functional mobile devices, and the desire to cut costs - you may want to speak with people like you who are already enjoying the savings before you decide to arrange for an audit and discover how much you can save.

I wouldn't advise you to get in touch and arrange for a 'time leakage' cost savings audit until you are ready to start saving a fortune!

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Payroll Outsourcing Company - Relieve Your Business From Payroll Processing Deadlines

A payroll outsourcing company relieves your business of the tasks of processing payroll, issuing checks, withholding tax and benefit deductions, tax filing, or retirement services. It manages for you your payroll functions with great accuracy, such that you would almost always no receive any complaint with tax laws and regulations. In some cases, payroll outsourcing providers could even provide complete HR services, managing the entire HR department for you.

General payroll tasks include:

- Preparation and delivery of payroll
- Reporting of payroll
- Calculate of FICA, FUTA, SUTA, Federal and State withholding
- Filing of payroll taxes
- Audits
- Updating of employee files
- W-2, W-3 and 1099 forms
- Reporting of 941 and 940
- Garnishments
- Assumption of liabilities and responsibility for payroll taxes, reporting and audits

What exactly should you look for in your payroll outsourcing company?

- Flexibility and customization-optimum mix of services for your payroll should be met, allowing employees to have an unlimited number of pay rates, job distributions, automatic payments, deductions, and taxes, payments in multiple banks. Payroll outsourcing company system should allow payments made by employees to be delineated by financial institution, flat percentage, or repeating payment amount.

- Integration-payroll system must be able to integrate with your business' current accounting software, not the other way round.

- 401(k) Administration-system of payroll processing company system should allow the employee's contribution, employer matching contribution, profit sharing, and other fund sources to be distributed independently to different chosen funds.

- Time-off Benefit Management-payroll system should allow an unlimited number of time-off benefit plans for each employee.

- Reporting-payroll outsourcing company should follow the reporting system specified by the company.

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Payroll Outsourcing Providers - Entrust Your Payroll Tasks To Experts Online

Payroll, a part of accounting transactions which deals with the process of paying employees, calculating salaries and employee benefits, and withholding money from the employee for payment of payroll taxes, insurance, garnishments and other deductions. Processing of payroll also involves the calculation of staff wages, commissions, as well as reimbursement for employee-paid expenses such as travel expenses. These processes are now carried out by payroll outsourcing providers.

Payroll used to be known as a basic business process, but actually, it is far from basic. Payroll has become more complex over the years. It has become time consuming, even confusing given the changing parameters that are used in the system. It has also become expensive to update.

These are the reasons why a lot of businesses now outsource to payroll outsourcing providers or a specialist payroll bureau, what was once guarded and considered as the sensitive function of payroll. This bureau is responsible for processing of wages, staff cover, technical aspects, IT equipment maintenance, procurement of stationery and maintaining the general confidentiality of this sensitive information. Sophisticated integrated database management techniques, which provide customized payroll administration, are utilized by the various payroll outsourcing providers or payment specialist bureaus.

Relieving a business of this major process allows the businessman to use his or her precious time to focus on running the business and how to make it successful. Moreover, outsourcing payroll providers will save the businessman more money-as there is no need for the business owner to upgrade equipment, update software, purchase new equipment and stationery, and pay staff wages and social benefits. All of these will be taken care of by the payroll outsourcing providers or specialist payroll bureau.

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Nine Reasons Why Potential Clients Should Hire Your Bookkeeping Service

My least favorite thing is 'selling' my services to potential new clients. It makes me uncomfortable. Then a few years ago, Beth my business coach said, "Linda, why not describe the reasons why someone needs good bookkeeping? Talk about that during your initial meeting." I was skeptical; I didn't believe it would work. She encouraged me to try the approach at my next meeting with a potential bookkeeping business client.

Well, I did, and much to my surprise her bookkeeping business advice worked! Not only did that client hire me, but also referred me to two colleagues. The approach I used - and still use - is simply to explain why it is so important to have good records.

Here are nine reasons why it's important for businesses to have good financial recordkeeping systems. Use one, two or all of them with your next potential new client. Whether your potential client is devising or revising their bookkeeping routine, remind them that the purpose of your bookkeeping business is to help them manage their business tasks.

#1 Reason for Retaining Bookkeeping Services: Monitor the Financial Success or Failure of Your Business

It's hard to know where you are going if you don't know where you've been. The same is true with your business - it's hard to know how your business is doing without a clear financial picture. A good financial system provides answers to the questions: Am I making money? Are sales increasing? How do expenditures compare to sales?

#2 Reason for Retaining Bookkeeping Services: Provides the Information You Need to Make Decisions

Evaluating financial consequences should be part of every business decision. Without accurate records and financial information, it's difficult to forecast the impact of any given course of action. For example, financial information gives insight as to whether or not it pays to hire another salesperson. Accurate records reveal the profitability of any line item.

#3 Reason for Retaining Bookkeeping Services: Obtain Bank Financing

The best time to seek financing is when you don't need it. The bank will want to see your income statement, balance sheet and tax returns for the most current and prior years, as well as projected statements showing the impact of the requested loan.

#4 Reason for Retaining Bookkeeping Services: Obtain Other Sources of Capital

If your business has reached the point where you need to take in a partner or investor, any prospective associate will want to become intimately familiar with your financial picture. Suppliers and other creditors may also ask for certain financial records. The source of this information is based on your day-to-day record keeping.

#5 Reason for Retaining Bookkeeping Services: Prepare a Budget

All businesses should use budgets for planning purposes. Budgets keep businesses on track by forecasting cash needs and controlling expenditures. When companies seek financing, bankers or prospective investors look for budgets as evidence of planning and stability.

#6 Reason for Retaining Bookkeeping Services: Prepare Your Income Tax Return

No matter what your business entity, you must file an income tax return and pay income taxes. With good records, preparing an accurate tax return will be easier and filing will more likely be done on time. Poor record keeping may result in underpayment or overpayment of your taxes. If your CPA prepares your tax return, poor records could result in higher accounting costs.

#7 Reason for Retaining Bookkeeping Services: Comply with Federal and State Payroll Tax Rules

If you have employees, you are aware of the myriad of rules and regulations relating to payroll taxes. Payroll tax must be deposited according to strict deadlines. Late payments of payroll taxes result in severe penalties, including jail time!

Payroll tax returns must be filed quarterly, and must reconcile with payroll deposits made during the quarter. At year end, you're required to give employees and the government W-2 forms, which must agree with your quarterly payroll returns. Sound bookkeeping practices, even if you use a payroll processor, will make compliance with payroll rules easy. Poor records will make it impossible.

#8 Reason for Retaining Bookkeeping Services: Submit Sales Taxes

If you collect sales tax, good records make it easy for you to compute the tax due and prepare the required reports. Sales tax must be deposited according to strict deadlines. Late payment of sales taxes can result in severe and unnecessary penalties and interest.

#9 Reason for Retaining Bookkeeping Services: Distribute Profits

If your business is a partnership, you will need good records to determine the correct amount of profits to distribute to each partner. If you're operating as a corporation, profits that you'll be paying out as dividends to the shareholders must be determined.

I encourage you to try this approach. It's one of the best pieces of bookkeeping business advice that I can pass onto you.

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Why Should You Outsource You're Payroll?

Business owners who elect to outsource their payroll have less stress and more downtime than business owners that keep their payroll in-house. Owners have enough to worry about in running a business and performing payroll calculations and worrying about tax penalties shouldn't be one of them. Payroll services save businesses Time & Money.

Payroll services are especially popular with small-medium sized businesses. Typically, the payroll functions usually fall on the shoulders of the small-medium sized business owners. Owners can spend countless hours weekly on payroll calculations, but if you outsource to a payroll service provider, it can take minutes!

So, what should you look for when searching for a good payroll provider? First, make sure that their payroll service can actually meet the payroll demands of you're business. Owners often make the mistake of going with a company and then having to switch to another payroll provider. Second, make sure that you're payroll provider is dependable and accurate. This will allow both businesses to function more efficiently and form a solid business relationship. Make sure to ask other companies who do business with them if they are happy with their service. Remember, make sure to ask at least three or four owners so you can gain more insight on exactly what they're reputation is.

It is truely perplexing as to why more owners don't use payroll services. After all, payroll providers often save companies time and money. Also, business owners already have enough on their plate as it is. My recommendation is that you start the search for a new payroll provider today. Let payroll services do their job so you're companies can do yours!

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Payroll Outsourcing

Payroll outsourcing is a very common and growing practice these days. Payroll is an important business function that deals with the process of paying employees for services rendered. Payroll outsourcing can be defined as the accomplishment of a payroll task by some external agency. There are many reasons why companies outsource payroll, but the most prominent benefit lies in the fact that it often saves money. Basic payroll outsourcing services include calculating paycheck and tax obligations for each employee, printing and delivering checks, and providing management reports.

Every business owner knows that handling payroll can be a headache. Preparing payroll internally can cost valuable hours of employee time every pay period, and require expensive accounting software and training. Besides, the person handling payroll of an organization internally needs to keep up to date with changes in personnel, deadlines, and tax requirements on an ongoing basis. Payroll outsourcing is an affordable way to take away these burdens, because it is a time-saving and cost-effective alternative to internal payroll processing.

Payroll actually commences with the worker signing up with a company. A typical payroll report contains items such as gross hourly wages and gross salaries, bonus payments including stock given as a bonus, overtime pay, severance pay, per diem and travel allowance, and contributions to deferred compensation by employees.

Today, payroll outsourcing is a vital part of an organization's payroll and benefits functions. This will improve employee satisfaction and enable the organization to focus its assets on mission-critical areas. The market for payroll outsourcing services is competitive and there are a number of key points, such as speed, accuracy and ease of use, to consider when opting to use a payroll company.

Though payroll outsourcing may prove highly valuable for many organizations, it also has many drawbacks. It is essential that every company precisely assess its requirements to determine if outsourcing is a feasible alternative.

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Payroll Outsourcing Costs

Payroll outsourcing costs are negligible when compared to the expenditure incurred in processing payroll with in-house staff. According to statistics, 40% of the entire administration time of a small business concern deals with payroll processing. Payroll outsourcing is a cost-effective solution for proper profit management. The cost of outsourcing is based on the specific services provided. Most of the companies offer some basic packages as well as advanced versions. The price of the package varies with the added advantages.

Payroll outsourcing costs depend on the printing of checks also. An extra amount is charged for printed check delivery to the client. In addition to a basic account charge, the cost of a check on average is $2 to $3. Each additional function is charged nominally. A small business will likely have to pay $3 to $5 per check for a full service solution.

Normally the charges are calculated from the figures given to the company when setting up the account. The charge varies with the number of employees. Some packages offer a slab system for the number of employees. For a particular slab, only the period of service is charged. If the number of employees exceeds the basic slab, then another charge package has to be subscribed to. Larger employee concerns can avail of attractive cheaper packages.

The packages cost starts from $10. An average cost-effective package costs $15 to $30. Survey reports state that an average business enterprise spends at least $59 on payroll costs. Quarterly charges are also collected along with the usual charges. Customers can opt for annual plans which generally cost around $199-$299.

Many companies offer payroll processing. Very often, these companies also offer free trials. The selection of the service provider must be done only after a thorough evaluation of the market and comparison of competitive prices and services.

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Certified Payroll Software

Certified payroll software is a computer program that makes certified payroll reports, statements of compliance, "no work performed" payrolls and general or custom-designed plan benefit reports. Certified payrolls are payrolls generated under Davis-Bacon act. It requires the submission of weekly payroll report beginning with the first week that a company works on a project and for every week there after, till the work completed. These payroll reports are to be signed and must have certificate that the information given in it are true and correct.

The major certified payroll reporting forms used are 'United States Department of Labor form WH-347 Payroll Certification' and form 'WH-348 Statement of Compliance.' Although most states follow these forms, some states require specialized forms, which are mostly derived from these forms. The companies are required to submit "no work performed" payrolls whenever there is a temporary break in work. Certified payroll software programs automate all these tasks by generating completed payroll reporting forms which are ready to be signed and mailed. Most certified payroll software programs read data directly from QuickBooks company file. So copying or re-entering of data is not required.

The payroll report generated by certified payroll software programs must produce information about the following. Project and contractor/subcontractor information with address, employee information with name, address and social security number of each employee, withholding exemptions, employee work classification, hours worked with date, total hours worked by employee, rate of pay/cash fringes, gross amount earned on this job/all jobs, deductions and net wages paid for week.

Certified payroll software program saves time, improves accuracy and minimizes double data entry and other input complaints due to human errors. When purchasing a certified payroll software it should be noted that it deals with the payroll forms of your state. The cost of certified payroll software is defined by its use in the particular field and the number of employees working and the company providing it. Every contractor and subcontractor is required to keep their own certified payroll reports and other basic records which are inputted to certified payroll software programs for at least 3 years after the project is completed.

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Payroll Management - Start Planning Now

Payroll management is an issue that is never too early to start considering. Obviously, in the early stages of your business, your payroll management will consist of paying yourself. As your business grows you will have to concern yourself with compensation for you and your employees.

Payroll management in a business that has employees requires planning for salaries and hourly wages. There will also be payments to subcontractors for technical and sales related services to consider. You will eventually become too busy to do it all yourself and you will need help.

Before you get to the stage where you need to hire additional help, it is a wise strategic move to think about your payroll management needs and plan accordingly.

Payroll Management Issues
Salary versus hourly wage
Bonuses and commissions
Compensation Package - vacation pay, time off, sick days, holidays
Employee Benefits - health care, dental plan, pension
Insurance - Disability and Life

A common aspect of payroll management that gets overlooked is payroll taxes. No matter what you do, you can't avoid these for either yourself or your employees. The employer's portion of payroll taxes will cost you money. Effective payroll management takes this expense into consideration from the start.

The Bottom Line on Payroll Management

Payroll management is an issue you need to think abut before you have employees. Even if the payroll roster is just you, your business will still have payroll expenses. It is never too early to start thinking strategically about your payroll management. You should be formulating a plan for handling employees and subcontractors and the expenses that come along with them, long before you actually need them.

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Payroll Services

While processing payroll in-house can be painful and time-consuming, the possibility of outsourcing these services is a great boon to many companies. These service providers give businesses the right solution, often tailor-made to suit particular needs. They say their solutions make any business more economically viable by reorganizing and supervising its administrative needs vis-?is the employee, including payroll, benefits, tax withholding and compliance processing.

Once the onus of payroll services is placed on the shoulders of these payroll companies, the business itself can actually focus its energies on expanding and building its core competencies, so that bottom lines can see a major positive difference.

Moreover, the transmittal of payroll taxes and filing income tax returns with federal, state and local taxing authorities are not time- or cost-effective. Whereas if the electronic filing and payment service for federal, state and local taxing authorities is availed of, then timely filing and payroll requirement doesn't become burdensome.

Furthermore, while taking advantage of payroll services, the customer can choose the means of data entry that is most convenient, such as phone, fax, email or entry directly through the Internet. Payroll information can be accessed from anywhere via the Internet 24/7, with the help of a protected login ID and password. The employee information can even be altered or printed, as per requirements.

There are companies that provide payroll services for non-sourced workers, previous employees, and contract workers who are not considered independent contractors. Payroll services in that case will provide an all-inclusive collection of benefits complete with medical plans, retirement, tax plans and life insurance, among other things.

This type of payroll service management for contractors is customized according to the needs of skilled contractors, presenting direct deposit and tax compliance plans on a case-by-case basis, health and dental coverage, retirement plans, dependant care plans before tax, worker's compensation, unemployment insurance, and an hour's worth of free financial and tax consultation, electronic timecards and weekly paychecks, to name a few.

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