DIY Payroll Management for Small Businesses in Raleigh

Payroll management is a critical task for small business owners in Raleigh, North Carolina. While ensuring employees are paid accurately and on time, you also need to keep up with tax regulations. Is managing payroll yourself the right choice for your business? Let’s explore the process, the pros and cons, and whether DIY (Do It Yourself) payroll fits your business.

Who Should Consider DIY Payroll?

While DIY payroll isn’t for everyone, it can be a good option for certain small businesses in Raleigh. If your company fits the following criteria, DIY payroll might be a good fit:

• Small team: If you have a small team, managing payroll in-house can be more manageable.
• Simple payroll needs: If your employees work consistent hours with minimal overtime, DIY payroll may be more efficient.
• Owners with time and knowledge: If the owner or manager has the time and financial knowledge to handle payroll tasks and navigate regulatory requirements.
• Cost savings: You’re focused on maintaining a tight budget.

However, before diving into DIY payroll, it’s important to understand the commitment it requires. Payroll isn’t just about cutting paychecks, it involves a significant investment of time, effort, and expertise. From ensuring accurate calculations to staying compliant with federal, state, and local regulations, running payroll internally can be both rewarding and challenging.

Here are the top pros of managing your payroll in-house:   

• Full control: By managing payroll internally, you have complete control over every aspect of the process. You can adjust the payroll schedule, handle payroll discrepancies quickly, and make changes without waiting on a third-party provider. This flexibility can be a major benefit, especially for businesses that require a hands-on approach.
• Montior employee data: When payroll is handled internally, sensitive employee data stays within your company. You have direct control over who accesses payroll information, reducing the risk of data breaches or unauthorized access.
• Customization: By managing payroll in-house, you can tailor the process to meet the specific needs of your company.

While all the pros sound great, before you make decision to DIY your payroll, let’s discuss the cons of managing your payroll in-house:

• Time consuming: Running payroll internally involves a significant amount time. This means taking away your time and focus from running your business.
• Human error: Payroll mistakes such as miscalculating wages or missing tax forms can lead to costly penalties for small businesses.
• Compliance: Without proper HR knowledge, it is difficult to make sure your business is complying with the ever-changing tax laws and regulations.

Ultimately, the decision to manage payroll in-house comes down to your business’s specific needs and resources. We advise you to consider the pros and cons above to make the best decision for your company.

Essential Steps for DIY Payroll

Setting Up Your Payroll System

If you’re one of the many small businesses in Raleigh, North Carolina taking the DIY payroll route, choosing the right software can make or break your experience.

Your business is unique and with the dozens of payroll vendors in the marketplace today, shopping can quickly feel overwhelming. Start by identifying the key areas where your business needs support, whether it’s payroll, timekeeping, or other HR functions.

We recommend you consider the following features:

• User-friendly: Look for software that is easy to navigate.
• Integration with other business tools: The software should integrate with your accounting, HR, tax filing and timekeeping system to simplify data management.
• Compliance with tax regulations: Ensure the software is updated regularly to comply with federal, state, and local tax laws.

Some popular options for new business owners include isolved and QuickBooks payroll. These platforms offer a variety of features designed to meet the needs of small businesses.

Managing Employee Information

Effective fraud prevention is crucial to safeguarding your company against financial misconduct and unauthorized transactions.  As technology advances, data breaches and payroll fraud continue to threaten small businesses. According to a recent statistic, 42% of small businesses are affected by payroll fraud each year so making sure that your employees’ personal identifiers, salaries, and bank details are secured will be essential to managing your company’s payroll.

By taking proactive steps to protect sensitive data, you reduce the risk of fraud and build a foundation of trust with your employees. We recommend small businesses invest in payroll software that is encrypted with security features that prevent vulnerabilities.

Processing Payroll

If you’re considering DIY payroll, it’s crucial to ensure that you understand the full scope of what’s involved. Each step requires attention to detail and compliance with tax laws and regulations.

Let’s break each step down:

• Calculating wages: This involves determining how much each employee should be paid based on their salary or hourly rate, overtime, bonuses, and any deductions.
• Withholding taxes: You are responsible for withholding federal, state, and local payroll taxes from your employees’ paychecks. This includes income taxes, Social Security, and Medicare contributions.
• Benefits: Deductions for benefits need to be included in each payroll cycle, along with any other voluntary deductions.
• Issuing payments: Once wages and taxes are calculated, the next step is to pay your employees, which can be done through direct deposit, checks, or pay cards.
• Employee classification: Whether your employees are full-time, part-time or contractors, it’s important to classify them correctly so that you comply with employment laws and regulations.

Record-Keeping and Reporting

Did you know that employers in North Carolina are required to keep all payroll records for employees for up to 3 years?  Maintaining a detailed record of payroll transactions is imperative for compliance with North Carolina regulations. These records include detailed information about wages, hours worked, overtime, and other payroll-related data.

Organized and accurate recordkeeping isn’t a recommendation, it’s a legal obligation. Small business owners in Raleigh are also required to keep record and report payroll taxes, including federal and state income tax withholdings, Social Security, and Medicare contributions, as well as unemployment taxes.

Labor laws are strict about record-keeping, tax reporting, and wage payments, meaning employers need to stay on top of changing laws to remain compliant. For businesses using DIY payroll, it’s important to invest in reliable payroll software that ensures you’re maintaining these records accurately and securely. Failure to keep these records can result in fines or even legal issues.

Common Challenges in DIY Payroll Management

Keeping Up with Changing Regulations

Keeping up with the ever-changing compliance regulations continues to be a challenge for small business owners in Raleigh. These regulations can become overwhelming, especially when juggling the demands of day-to-day operations.  Failing to comply can result in large penalties, legal consequences with the DOL and IRS, and could damage your company’s financial reputation. For businesses that are considering DIY payroll, consider regularly attending employment law webinars and connecting with SHRM-CP certified HR consultants to ensure that your business is in good standing.

Avoiding Payroll Errors

Managing your payroll internally is great, however, even the smallest payroll error can cause major problems for your business.

Here are a few common mistakes that we often see when it comes to DIY payroll management:

• Incorrect wage calculations
• Misclassifying employees
• Inaccurate record keeping
• Non-compliant with tax regulations

The list goes on. It’s important to make sure that you are paying close attention and are avoiding unnecessary payroll errors. You should invest in payroll software that is known for its accuracy and compliance features. Prioritizing accuracy and compliance in your payroll processes will not only protect your business but also contribute to a more efficient workplace.

Time Management

Processing payroll can be very time-consuming. According to a recent survey, it takes a single employee 1-2 full days of work to process payroll. Balancing payroll duties with other business responsibilities can be challenging, but with the right strategies, you can streamline the process and make the most of your time.

There are multiple processes you can put in place to help you manage your time and payroll effectively. Consider streamlining data collection, automating payroll, and delegating tasks to another team member. By organizing your DIY payroll, you can reduce the burden of administrative tasks and free up your time to focus on other high-priority tasks.

When to Consider Outsourcing Payroll

Signs Your Business Has Outgrown DIY Payroll

Although DIY payroll might work for the time being, there may come a time when it’s no longer practical for your business.

A few signs that your business has outgrown DIY payroll:

• Number of employees has increased: More employees make manually managing payroll harder.
• Change of pay structures: If you’re paying commissions, bonuses, overtime pay, processing your payroll yourself could become difficult and time-consuming.
• Operating in multiple states: Planning on expanding outside of North Carolina? Different states with different tax requirements can become overwhelming very quickly.

If you’re experiencing any of these signs, it may be time to consider outsourcing your payroll and HR needs to professional payroll services provider.

Benefits of Outsourcing Payroll management for small business

As a small business owner, your goal is to grow your business and outsourcing payroll might be a smart move for your company. Payroll service professionals can provide you with expert advice on running your employee’s payroll and help keep your business in compliance with the ever-changing employment laws and regulations.

When choosing the right payroll provider in Raleigh, make sure that they can adapt to your specific needs. You should strive to partner with a company that prioritizes scalability and flexibility to help navigate growth and change. As well as a provider that continually advances with technology is critical, so they can provide you with a variety of strategic HR solutions.

Conclusion

If you are a small or start-up business, DIY payroll might be the most beneficial and cost-effective solution for you. DIY payroll requires a lot of time and expertise, so it’s essential to take the time to evaluate your payroll needs and reach out to local payroll experts if you’re unsure which path to take!

With over 15 years of experience in the Raleigh area, our expert payroll team can help your business ensure compliance with employment laws, and self-service payroll systems for employees, and provide you with ongoing consultive HR support to address any issues promptly.

Still not convinced? Hear from one of our happy payroll customers in Raleigh:

Client Spotlight at Randy’s Pizza in Raleigh, North Carolina

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