Payroll Software for Single Employee

Managing the salaries of a small company can be time consuming. Payroll software for single employee will allow you to pay your staff on time, calculate their overtime and keep track of all changes that affect your payments.

This article help you to choose the Payroll Software for Single Employee. You can also take a look at the comparison table of few payroll software that helps you to choose the right Payroll Software for your Single Employee.

I am often asked what is the best payroll software for a single employee, small contractor or home based business? The fact that these questions are asked so frequently is an indication that many people are not aware of online software available which they can use to process their own payroll. With access to the internet and a printer at hand, you can prepare/print/save online payroll reports either as a PDF or an excel file.

Because payday means payroll—and payroll is complicated and takes time. Twenty percent of small business owners reported spending more than six hours a month handling payroll taxes. And some said they spend more than 10 hours a month, or the equivalent of three work weeks a year, just dealing with payroll.

Luckily, automating payroll makes things a whole lot easier—especially when you’re a new business owner. Here are four reasons why you might want to consider getting payroll software right as you’re first setting up shop.

What is payroll software?

Payroll software is an on-premises or cloud-based solution that manages, maintains, and automates payments to employees. Robust, integrated, and properly configured payroll software can help organizations of all sizes maintain compliance with tax laws and other financial regulations, and reduce costs. This frees human resources (HR) teams from routine tasks so that they can spend more time on planning, budgeting, and other business-forward initiatives.

How does payroll software work?

Payroll software integrates with other core business systems to ensure that employees receive accurate, on-time compensation in the appropriate manner (such as direct deposit, check, or payment card). Employees can typically access the software to edit their personal information, payment preferences, and other details.

For employers, payroll systems need to be reliable, easy to configure, and flexible enough to manage and automate payments to workers of all types (including salaried and hourly employees, temporary and gig workers, and others), at different locations around the world. Payroll systems should simplify tasks, making it easier for staff to manage complex rules, payroll flows, and checklists, and maintain compliance with tax laws and other financial regulations.

Why do organizations use payroll software?

Millions of organizations worldwide rely on payroll software to streamline and manage employee compensation and ensure

Timeliness and accuracy. Especially with mergers and acquisitions, new hires, and shifting regulations, payments to employee can be complicated and time consuming. With payroll software, organizations can be sure that employees are paid the right amount and on time, every time, helping to build employee trust and confidence.
Transparency. For most organizations, personnel costs are the single highest expense. Payroll software integrates with other lines of business, such as finance and accounting, providing transparency that helps organizations stay on budget, create timely reports, and plan for the future.
Flexibility to adapt and scale. When business changes, payroll software makes it easy to adapt. For example, when an office opens in a new region with different taxes and regulations, the software automatically incorporates the new rules, so data does not need to be entered for each employee.
More time for high-level tasks. Compared to manual and outdated alternatives, payroll software can save organizations hours each month—time that can instead be devoted to other critical business initiatives.

How does payroll software help businesses?

The benefits of implementing an efficient, compliant, and configurable payroll software solution go beyond the tactical tasks of paying employees. It also helps organizations

Improve morale. Avoid instances in which employees are paid the wrong amount, are not paid for overtime or other work, are paid late, or are not paid in their preferred way.
Tighten security. Payroll systems help ensure that the right people have access only to the appropriate information for their role. Especially with many employees and gig workers working from home, it is critical for organizations to have software in place that prevents double payments, confirms that every payment is correct, and automatically calculates the appropriate benefits and tax payments for each employee.
Deepen business insights. When payroll systems are integrated with other core business systems, organizations gain deep insights that can help them develop more accurate budgets and forecasts. In minutes, organizations can, for instance, identify the real-time personnel costs for each department and the revenue achieved for that cost over different periods of time.
Improve reporting. Automated payroll software provides real-time insights that can easily be translated into charts and graphs that executives can use to make critical business decisions.

How does payroll software help employees?

Payroll software is not only good for business. It’s also good for employees. It helps ensure that employees are paid the right amount, at the right time, via the payment method they prefer—all with a minimum of time and hassle.

Employees can also take advantage of user-friendly interfaces to view their payment history and easily adjust their personal information and payment preferences. If they have questions, they can get answers quickly, minimizing work disruptions.

1. You want to accurately calculate your pay, whether it’s a salary or owner’s draw

You’d think that paying yourself would be as easy as writing a check and depositing it (or, even better, simply direct-depositing money into your account). But there are actually different ways to pay yourself, depending on factors like your entity type, business plan, and years in operation.

As you’re thinking about how you want to pay yourself for the first time, here are the main types of owner payments you should know about:

Salary

A salary is a set, recurring payment to your employee(s)—which can also be you. If you own an S or C corporation and are involved in the day-to-day business operations, you’ll want to give yourself a salary.

S and C corp owners need to make sure they’re paying themselves a reasonable compensation as an employee. Of course, “reasonable” is objective, but it generally means you should pay yourself what you’d make if you had the same role at a different company.

When you start paying yourself a salary, payroll taxes kick in—and a payroll service will help you make sure you’re taking the correct amount out.

Owner’s draw

An owner’s draw is for LLCs, sole proprietorships, and partnerships. It’s exactly what it sounds like: a way for owners to withdraw money from their business for their own personal use.

This payment method differs from a salary in a few ways:

It’s more flexible. You can pay yourself however much you want (as long as your business has the money), whenever you want. This makes it a great option if your cash flow is inconsistent and, for example, you need to keep more money in the business during the slow season.
You’re not taxed right away. Owner draws aren’t taxed at the time they’re taken out. But keep in mind that you do have to pay taxes on them when you file your individual return.

2. You don’t want to deal with calculating and paying payroll taxes on your own

When people gripe about taxes, they tend to think about the financial aspect of it. However, for small business owners, figuring out all the tax responsibilities is often the worst part. Fortunately, many payroll services can make life easier by taking out the correct amount of taxes and filing them automatically.

According to the National Small Business Association (NSBA) 2018 Small Business Taxation Survey, payroll taxes were easily the second-most burdensome tax—both in terms of administration and cost.

Why are payroll taxes such a headache? Let us count (some of) the ways:

There are a bunch of agencies/authorities businesses need to pay
Each of these agencies has different filing deadlines
Payroll taxes need to be paid within a specific amount of time after your employees are paid
There are ongoing changes to state, federal, and local regulations
If you take an owner’s draw, your audit risk goes up

And that’s not to mention further complexities if you have employees in other states or if you need to pay bonuses or overtime.

Yes, payroll taxes still apply even if you’re the only employee

Unfortunately, you’re not off the hook if you’re the only employee. The IRS doesn’t make special exemptions for “solopreneurs” or sole proprietors. Once you start paying yourself a regular salary, you’ll need to deduct the correct amount and send payments to the IRS (and usually a state tax authority) at least every quarter.

If you’re paying yourself through an owner’s draw, remember that you’ll pay taxes on the amount through your individual tax return.

3. You want to stay compliant as you bring on contractors (and eventually employees!)

Hiring people to help your business can make your life both harder and easier. On one hand, extra help can give you more time to work on your business. On the other, there are a ton of rules you need to follow when bringing on contractors and employees.

A payroll service can help out in a couple of ways:

Sending new hire reports. When you hire a new employee, many states require you to send them information like your new hire’s name, address, Social Security number, and date of hire within 20 days (or sooner). Fortunately, many payroll software companies can automatically send new hire reports to the state for you.
Collecting new hire paperwork. Forget file cabinets or desktop folders. Not only can some payroll software help your new hires complete mandated federal forms, such as I-9s, W-4s, W-2s, and 1099s, but it can also keep all those forms organized for easy access.

4. You don’t want to make payroll mistakes

Some mistakes, like typos on your site, are embarrassing but manageable. Other mistakes, like messing up payroll, have real-life implications.

In the 2017 fiscal year, the IRS levied over $5 billion in penalties for mistakes businesses made with their employment taxes. Plus, some payroll mistakes could even trigger a tax audit.

Instead of spending hours poring over numbers and forms, consider letting payroll software help you avoid mistakes like:

Not staying current on payroll rules and regulations. One of the biggest advantages of using payroll software is that it helps you stay on top of changing state and federal requirements (like the 2017 tax reform, for instance). This means you can worry less about being penalized for not complying with the law.
Not paying employees correctly. When you have employees, you need to make sure you’re paying them often enough and giving them the correct amount (which includes amounts for any accrued sick time or vacation, depending on where you are located). Otherwise, your employee(s) can sue and you could even lose your business license. Payroll software can help protect your business from wage complaints by automatically paying your employees and keeping records of each payment.
Not keeping the right reports on file. As mentioned above, in addition to needing to fill out various forms whenever you hire someone new or run payroll, or to help figure out how much you owe in taxes, you’ll also need to keep them on hand for a certain amount of time. By using a centralized service, like payroll software, to fill out forms, you can keep them organized for whenever you need them.

What to look for in a good small business payroll service

Different payroll providers offer different things, but in general, many can help you with the following:

Calculating and filing payroll taxes
Filling out forms for new hires
Determining payroll deductions
Paying employees (including yourself!)
Withholding taxes
Filing end-of-year taxes
Helping you avoid the most common payroll-related mistakes
Sending you alerts when you have tax deadlines to meet
Preparing W-2s and 1099s
General management of your employee records

When looking for a payroll provider, keep in mind that there are many options out there. You no longer have to go with a pricey payroll service that’s meant for businesses with hundreds of employees. Today there are a number of providers that are geared toward small businesses—their main goal is to make payroll easier at a price point that won’t bankrupt your business.

Deel

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By Deel

4.7 (6)Deel is global payroll and compliant hiring built for remote teams, where anyone, anywhere can get hired and paid. Instantly hire full-time employees or independent contractors across the world legally, in minutes. With Deel, companies take care of payroll and create localized legal contracts in over 150 countries using a tech-enabled self-serve process. Deel serves more than 4,500 customers, from SMBs to publicly traded companies. Learn more about DeelCompareSave

Performly Payroll

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By Performly

0.0 Automate payroll processing and reduce human errors payroll services automated and takes minutes to complete. Payroll software is easy to use and affordable and can mitigate errors in the payroll process and reduce the hours spent calculating employee hours, wages, and tax withholdings via a cloud service using a pay-as-you-go model. Learn more about Performly PayrollCompareSave

How does payroll software work?

Why do organizations use payroll software?

How does payroll software help businesses?

How does payroll software help employees?

1. You want to accurately calculate your pay, whether it’s a salary or owner’s draw

Salary

Owner’s draw

This payment method differs from a salary in a few ways:

2. You don’t want to deal with calculating and paying payroll taxes on your own

Why are payroll taxes such a headache? Let us count (some of) the ways:

Yes, payroll taxes still apply even if you’re the only employee

3. You want to stay compliant as you bring on contractors (and eventually employees!)

A payroll service can help out in a couple of ways:

4. You don’t want to make payroll mistakes

Instead of spending hours poring over numbers and forms, consider letting payroll software help you avoid mistakes like:

What to look for in a good small business payroll service

By Deel

By Performly

By ADP

Frequently Asked Questions About Payroll Software

What is payroll software?

What is payroll software best for?

What is the best payroll software?

What is the top-rated payroll software for single employee?

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