6 Bad Things From a Bad Payroll System You Must Avoid
A good company is not only supported by great employees and advanced company systems. A sound payroll system is essential to ensure your employees not only get paid but that your business is protected legally.
How you will onboard, track, insure, and manage your employees should be a part of your business plan. Don't wait until you have ten employees to have this in place.
And before you ask, we do not recommend doing payroll with Quickbooks. We'll cover why in a separate article.
6 Disadvantages of Not Using a Payroll System
1. Late Payouts
If you were an employee (or a 1099 contractor), would you like to be paid late? Of course not.
Our recommended vendors allow you to set up automatic payments to your employees and send reminders when you haven't processed your payroll. Paid employees are more likely to be happy employees.
2. Tracking benefits and time off
There is guaranteed time that employees are allowed by law in the United States. Even if you're starting small, you don't want to stay that way, and 50 employees can sneak up on you. A great payroll vendor will allow you to set this up in advance, making tracking it simple.
3. Reduce Errors & Liability
Doing payroll manually (in systems like Quickbook) is prone to errors. Not only is there an increased risk that employee payouts are incorrect, but you assume all of the liability if your unemployment taxes, municipal (and federal taxes), or insurance payments are wrong. Use a payroll service that will take all of this on for you.
4. Track Employee Performance
Payroll systems are moving past the time of strictly accounting. They allow you to manage what's going on with your employee's performance. Most of our recommendations will link to outside software that can track calls made, sales closed, and attendance, making it much easier for you to pay for performance.
5. Employee Discipline
Everything about your employees' work-life (minus medical information) should be kept in one place. A payroll system will help you do this. This is especially important when you need to respond to legal requests like unemployment award letters.
6. Inaccurate Financial Statements
We'll spill the beans here. When you do your payroll in Quickbooks, your financial statements are sloppier and harder to read than they need to be. Using a payroll company will streamline those QuickBooks entries down to a single payroll, taxes, and insurance line for each run.
Choosing the right payroll company is key to the success of your company.
