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Although profit and loss are important factors in business performance, time is an equally important resource for a small business.
Fremont, CA: Payroll is a complicated topic. Tax laws are constantly evolving. And paying employees is always the last thing on the to-do list. Fortunately, small business payroll systems have come a long way in recent years. Many of today's payroll systems have allowed small business owners to abandon time-consuming and confusing manual processing in favor of automated payroll, which increases consistency and performance.
A few common pain points of small business payroll:
Payroll Is Complex
If only payroll could be as easy as paying the workers set sums on a daily basis. Instead, business owners must exclude taxes, insurance, and retirement plan contributions from their paycheck.
Of course, owners won't be able to subtract taxes while paying independent contractors, so they will also have tax recordkeeping responsibilities – don't forget about 1099-NEC types. After decades of 1099-MISC use, these forms were first adopted in 2020, and this change highlights a major issue with payroll: tax laws never sleep. Because of their frequent adjustments, payroll can become so confusing that one might not even know where to begin.
However, several modern payroll software systems eliminate the need for tedious manual number-crunching, and some are constantly updated to match the most recent tax laws. While these features reduce errors and streamline tax calculations and employee salaries, they just keep the company on track rather than ahead of the competition.
A Time-Consuming Process
Small business owners are always on the move and have no time to spare. However, it is also normal to have to set aside significant amounts of time to sit down and oversee payroll.
Although profit and loss are important factors in business performance, time is an equally important resource for a small business. That is one of the reasons why payroll software was created in the first place: It saves a significant amount of time when measuring payroll and storing and accessing employee compensation data. However, payroll software continues to lag in terms of time savings: According to a survey conducted by the American Payroll Association, one-third of small businesses spend at least six hours per month on payroll.