One of the most important parts of an organization is its payroll accounting. Payroll is more than just providing a paycheck to an employee; it encompasses employee benefits, payroll taxes, salary calculation, hourly calculation, quarterly taxes, insurance deductions, and many other things. Payroll varies for all business, depending upon the amount of employees you have and the type of business you run. Payroll laws are constantly being updated and changed too.

You need to have some type of a system in place to handle all your payroll needs. You could hire a payroll accountant, purchase payroll software, or even outsource your payroll to a third-party payroll company. Payroll accounting will take care of all your payroll needs. So how can you select which method is best for your company? Here are some tips to help you decide:

In-house Payroll 

In-house payroll allows you to have greater control over your payroll and you have the ability to design your own reports. For a company that has complex requirements, in-house payroll may be a wonderful solution. There are several payroll software packages you can choose from that will keep you up-to-date with the latest tax releases. If you have in-house payroll, you are responsible for the entire payroll process and it is your responsibility to process the payroll accurately and on time. You can easily face penalties from the IRS if you file your Form 941 late or you do not pay your taxes on time.

If you would like to handle payroll in-house, you need to consider the following: 

• What are your needs? Do you have a small company or a large one that requires expensive payroll software programming? 
• Do you have a person on staff that is completely dedicated to payroll? 
• Check with your clients about their payroll solution. Do they have in-house payroll or have they out-sourced their payroll?  
• Does your retirement plan provider offer payroll solutions? 
• Will you be able to keep up with all the latest tax updates? 
• If we use payroll software, will it be flexible enough to include several different types of incomes, deductions, benefits, vacation leave, and sick leave? 
• Can you generate reports when you need them? Are you able to create the report or do you have to use pre-defined reports? 
• Can you pull up last year's tax information such as W-2s? 
• Will in-house payroll cost less than the average cost per employee? 

You need to make sure you thoroughly understand payroll and payroll laws before you decide to do in-house payroll. Learning all the details of payroll accounting can take a serious amount of time and without the right learning skills, you will waste more money and time trying to figure out payroll. Consider hiring a bookkeeper or payroll accountant who has experience in payroll and can dedicate the necessary time to it.

 One of the nice things your bookkeeper or payroll accountant will have to look forward to is payroll software. Since payroll is one of the most important aspects of a business, it is only understandable that people dedicate time to creating good software. If you are already running payroll software, take a look at its effectiveness.  Some accounting software programs offer payroll software as an add-on, so be sure to check that out. It is worth the extra investment to find payroll software that fits your needs and will help your bookkeeper or payroll accountant perform their job effectively. Here are the best payroll software programs on the market:

Intuit Payroll

The perfect payroll software solution for a small business that is running QuickBooks is Intuit Payroll. Intuit payroll allows you to input your staff member's hours and it will automatically calculate your employee's earnings, payroll taxes, and deductions. Intuit Payroll allows you print paychecks and W-2s. Intuit payroll also includes a direct deposit feature and it will calculate your Federal and State taxes and remind you when it is time to pay your quarterly and yearly taxes. Intuit will e-pay your taxes through their web site for no charge. Intuit payroll costs $29.99 a month, but you will get the first 3 months for free.

CheckMark Payroll

For a company that has up to 500 employees, CheckMark payroll is a great fit. Like other payroll solutions, it will easily interface with QuickBooks or other accounting software, saving you a lot of time. CheckMark Payroll includes the latest tax tables and Federal income tax laws and it allows you to prepare your W-2s. CheckMark will prints checks, W-2s, W-3s, and your Form 941. Your employees can have the option of utilizing direct deposit with CheckMark Payroll too. A great way to get the exact pay for each employee is to use time-clock software that can integrate with CheckMark. You can purchase CheckMark Payroll for $190.00.

Outsourcing Payroll 

Outsourcing payroll definitely has its advantages. First, it allows you to focus on other needs of the company. Second, it eliminates the need to pay an employee to focus exclusively on payroll. Third, outsourcing payroll will ensure you are in compliance with the latest payroll tax laws. Fourth, you do not have to worry about missing a payday.

Outsourcing payroll has become extremely popular with many small businesses. To outsource your payroll, you will hire a company like PayChex or ADP to pay your employees on a weekly, bi-weekly, or monthly basis. The company will process all your pay stubs and send you notification when they are ready to review. You can then look over all the calculations including your staff member's net pay, insurance, and W-2s. The payroll company will be in charge of depositing the money in your employee's bank accounts or they will mail you the checks to give to your staff members. For an additional charge, some companies will mail the checks for you. Using a third-party for your payroll needs is a smart idea for any company that has employees in different states or even different countries. The payroll company will be responsible for keeping in compliance with all the state and government regulations for those employees.

The largest disadvantage to outsourcing your payroll is that you will loose some control over your payroll. You will not be able to generate your own reports that are personalized to your needs. Instead, you will have to do everything through your payroll service provider.

If you would like to outsource your payroll, you need to consider the following:

• Find out how easy it is to make adjustments to reports, can you do it through web-based software?
• How flexible is the provider if you need to make changes to your payroll?
• Get references from your clients or other associates to find a good payroll provider.
• Does the payroll company have a large customer database? Do they have a high level of customer service?
• Do they offer direct deposit or can they mail your paychecks?
• How secure is your payroll information?
• How long will your data be kept and how often is your data backed-up?
• Can you pull previous pay stubs and W-2s?
• Who is liable if payroll issues are taken to court?
• What type of reports will be issued? Will it cost more to have personalized reports?
• Do they handle your W-2s and tax filing?
• How many clients do they have?
• How many employees can each client have?
• Is the payroll company cost effective? Does it cost more per employee to outsource your payroll?

Payroll outsourcing will ensure your company is up-to-date with the latest federal and state payroll laws. Keeping up with all the payroll law updates can be overwhelming and time consuming, so having someone else worry about it is quite nice. Payroll companies are also in charge of monitoring each employee's accumulated earnings, tax withholdings, and other information. Your payroll company should automatically issue W-2s at the end of each tax year. It should be easy to adjust your employee's salaries, direct deposit preferences, and other information. Check with 2-4 different payroll companies before you sign up for a service. You may notice that some payroll companies will charge a fee for additional services like direct deposit or tax filing, so make sure you find one that fits all your needs and doesn't have hidden charges.

A great company to use for payroll accounting is Paychex. Paychex has been around since 2001 and is a great solution for small and medium-sized businesses. Paychex will take care of everything for you. Depending upon the amount of employees you have, Paychex will charge you a fee per service you add. They will offer tax filing, 401(k) and employee benefits, insurance, HR administration, time and labor solutions, and employee benefits. There are several other features you can add on such as direct deposit, Form 941 filing, and online employee pay stubs. They will send you notifications when your quarterly taxes are due and they will pay the taxes for you and send you a receipt.