How do I pay employees? (Employee Series)
So, you’ve made it through the governmental requirements for hiring employees like accounts you need to set up and laws you need to follow – but how do you actually pay your new employee?
Your best option is going to be finding a payroll software that will meet your needs. It doesn’t necessarily have to meet all of your needs (other tools may be able to do that), but it’s important to know what your needs are with your employee and looking at your current tech stack to know how it “stacks” up.
When you’re looking for a payroll software, it really has to have the following:
Calculate accurate withholding for employees
Remit the withholding to federal and state jurisdictions
File quarterly and annual tax returns, including W-2s
If it doesn’t have those three basics, it’s not worth your time.
Additional features that are generally included are:
Direct deposit for employees (1-2 bank accounts)
New hire reporting
Time off tracking
Integration with other software/apps
Features for an additional cost are usually:
Time tracking (clock-in/clock-out)
Retirement benefits
Health insurance benefits
HR assistance
Local payroll tax compliance
The main softwares that we recommend are QuickBooks Online Payroll, Gusto* and Square Payroll*.
QuickBooks Online Payroll
Pros: Fully integrated with QuickBooks Online. Paychecks are created and processed through QuickBooks Online. You can see each paycheck individually in the same system. Premier and Elite versions include QuickBooks Time that allows your employees to track their time by customer or job (by your QBO customer/job list). This time flows into the payroll portal to process each paycheck and your payroll costs can show up separated by customer or job. Also allows integration with other time trackers.
Cons: Set up can be complicated and clunky. Support is okay. Limited options for retirement and health insurance processing. QBO won’t process any retirement or health insurance payments on your behalf but it may send the data to an external processor. Some local taxes are not supported. Time off setup leaves some to be desired.
Contact us for discounts!
Gusto*
Pros: Easy to use and set up. Many help guides with thorough information. Great time off setup. Will help process health insurance and retirement. Time entry software available, or can integrate with external software.
Cons: Only journal entries are imported into QBO for each payroll, no detail per employee.
Square Payroll*
Pros: Easy to use and set up. Best for simple employers with no benefits. Great cost.
Cons: Only journal entries are imported into QBO for each payroll, no detail per employee. Features are fairly limited.
Other payroll software that’s worth mentioning are ADP and Paychex. These are much larger companies that can assist with much greater complexities. They have been around for ages and use that to their benefit. The other companies listed here are rather newer, but they have many benefits in the technology sphere. ADP and Paychex are going to be more expensive and therefore not always recommended for our small business clients. If you’re interested in either of these companies, reach out to us and we can see if we have any discounts available.
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No assurance is given that the information provided in this blog is comprehensive in its coverage or that it’s suitable in dealing with each individual’s particular situation. This blog article exists to provide general information only and does not constitute tax or legal advice, and cannot be used or substituted for tax or legal advice. Savvy Bird Consulting, LLC is not responsible for the implementation or outcomes this material may have.