Hiring for your business, Part 2: Which payroll method is right for you?

[Editor's Note: This is the second in a series of Intuit articles we are republishing here on Little Square that may help you in the decisions you need to make before hiring workers. Look for more soon.]

In Part 1 of our series of Payroll articles, we talked about deciding what kind of employee you’re going to hire, Now it’s time to think about how you’re going to manage your payroll. There are three ways to do your payroll —by yourself, by yourself with the help of software, or by outsourcing to a third-party service. Use the chart below to figure out which method is right for you.

Do it yourself by hand Do it yourself with payroll software Outsource payroll to a third-party service
Pay Employees You do the following tasks manually:

  • Track time worked.
  • Calculate taxes.
  • Create paychecks yourself
  • You enter time worked into the software.
  • The payroll software calculates taxes automatically.
  • You print paychecks (or pay employees by Direct Deposit).
  • You report time worked to the payroll outsourcer.
  • The payroll outsourcer calculates taxes.
  • The payroll outsourcer typically delivers the paychecks.
Pay the Government
  • Calculate taxes manually and keep track of when taxes are due.
  • Make payments by mail or electronically.
  • The payroll software calculates taxes automatically and can remind you when taxes are due.
  • You make payments by mail or electronically.
  • Some software services or accountants can handle payments for you.
  • The payroll outsourcer calculates taxes and keeps tracks of when taxes are due.
  • The payroll outsourcer typically handles the payments for you.
File Tax Forms
  • Fill out forms manually.
  • File by mail or electronically (in some states).
  • The software fills out the forms at the click of a button.
  • You can file electronically or print and mail.
  • Some software services or accountants can handle tax filings for you
  • The payroll outsourcer completes the forms.
  • The payroll outsourcer handles the tax filing.
Choose the Option that Suits Your Company Best For business owners who are highly cost-conscious and who have the time, expertise, and willingness to handle administrative payroll tasks manually. For business owners who want to save time by automating as much of the payroll process as possible, while still maintaining control. The cost of software is modest compared to the time savings. For business owners who want to fully delegate payroll and tax filings. The cost of outsourced payroll can be higher than that of payroll software, but services may be more extensive.

If you find yourself in the “Do it yourself with payroll software” category, Intuit offers Intuit QuickBooks Payroll for Mac.

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About Shelly King

Shelly King works for Intuit as a member of the QuickBooks for Mac team. She’s the Managing Editor for Little Square and its main contributor. Shelly grew up in the South until 1994 when the Internet called her to Silicon Valley. She’s done a lot on the web ever since. Little Square was her idea. Yep, it’s all her fault. See all of Shelly's articles

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