The act of juggling
Running a business is a balancing act. Punctual salary payments, expense reports and generating profits are among other things a Herculean task. The law requires you to pay your taxes on time and keep your books properly. It’s like juggling balls while walking a tightrope. Because there is a lot to manage. From payslips to taxation, bank reconciliation to tax deduction, the list is long. To make matters worse, every single mistake is penalized and many companies pay heavy penalties for such mistakes.
Large companies can manage this using separate accounting departments, but it is a costly affair. Small businesses with small teams and tight budgets cannot do this with the same efficiency. For such businesses, there are two viable options to choose from. You can either opt for payroll software or hire an external payroll company.
1. Payroll Software
Payroll software is a good option for small businesses. Businesses with small teams, stable businesses, and transactions within the state can easily navigate with them. If you are willing to invest a certain amount of time in account management consistency, they will work. These programs can present the data in an organized format and simplify your work. But the opportunities for error are always there. The person responsible for entering the data into the system is you or your representative. If you make mistakes while entering the data, the software would become helpless and give wrong results. This takes you back to the beginning.
Missing revalidation system
The absence of someone to re-validate listings is a problem every small business faces. If you are trying to hire someone then the cost of labor and time would make this feat prohibitively expensive. If you don’t do this, there’s always a chance of an error.
Problems with complex data
The other problem with such programs is that they need to be managed carefully. Too many variations in the structure of entries can cause a lot of confusion. If you have part-time employees alongside your permanent workforce or make payments to freelancers or other third parties, adjusting their payments can be a huge nightmare. The calculation of the various tax lump sums for international transactions is also cumbersome in these programs.
Good for simple transactions
There is no doubt that if you are running a simple business without too many variables, these programs can prove to be a very cost-effective solution. But running a diverse business that depends on them may be too much to ask.
2. Third Party Payroll Services
The more viable option for complex scenarios is to use a third-party payroll service. These agencies with their certified employees can get the job done efficiently. In addition to payroll, you can also delegate a number of other important services such as tax administration, bookkeeping, balance sheet preparation, bank reconciliation, tax deduction and filing.
Revalidation of data at different levels
Due to the presence of a structured team of professionals, the data is checked at many levels and therefore the possibility of errors is negligible.
These agencies are very cost effective in their service. The same job cannot be performed by an in-house team at the same cost. In small companies, employees are idle most of the time. In medium-sized companies, it is revised. Calculated on a return on investment basis, these services are very cost effective.
The human touch
The other advantage is the human help. If you get stuck somewhere on a technical clause or need expert advice, these agencies can provide credible help.
No Binding Commitment
The biggest benefit is that these companies operate out of your office, so there are no infrastructure or overhead costs for you. You only pay for the services you need without undue obligation.
So if you run a small business and are struggling to navigate the confusing path of taxation, payroll and other technical accounting aspects, you can choose the right service for you. This will help you focus on your core strength of business development and no energy would be wasted in managing numbers on the books.