Electronic Payroll - Is it Right For You?
In this information day and age, more and more employers are turning to electronic payroll in order to get their employees their paychecks, and for good reason. There are many benefits to using electronic payroll that are beneficial to all involved. Employers benefit from electronic payroll by:
- Increased security. Electronic payroll helps ensure that account numbers and checks are not altered or stolen
- Savings. By having payroll directly deposited, employers reduce the cost of printing, mailing, and tracking paper checks.
- Convenience. Employers will not have to manually print checks and mail them out.
Employers aren't the only ones who benefit; most employees will prefer electronic payroll, also referred to as direct deposit, for a number of reasons, including:
How Does Electronic Payroll Work?
- Immediate access to payroll funds. Employees get their checks directly deposited immediately instead of having to wait
- Added security and privacy. Employees don't have to worry about checks getting lost or stolen in the mail.
While each service differs slightly in terms of such things as features and fees, the basic operation of electronic payroll works something like this: Employers access the service via the bank or payroll service's website. For paydays, electronic payroll automatically calculates deductions and lets you pay employees either by direct deposit to the employee's bank account or by a check from your account. (Some services, especially through banks, will only allow direct deposit to be made to accounts at their bank.) Then, they print off pay stubs to be distributed to employees.
Many electronic payroll services also help employers calculate state tax payments and allows filings to be made electronically. Costs for these services differs from each service and depends on a number of things, including services requested and number of employees. On average, employers of small to average-sized businesses can expect to pay anywhere between $10 and $15 per month per employee for electronic payroll services.
Is Electronic Payroll Right for You?
When trying to determine whether or not electronic payroll is right for your employees, there are a number of things to take into consideration, including:
- Costs. Electronic payroll fees can be hundreds of dollars a month, depending on the number of employees and the features your service provides. By doing your payroll yourself, you need only purchase software (generally about $200 a year) and figure shipping and printing costs for cutting checks each pay period.
- Convenience factor. Employers running a business are busy people. For some, the convenience that comes from having a service automatically do their payroll more than pays for itself. In addition, employees will appreciate immediate access to their money, rather than waiting for a check in the mail.
- Security. As a general rule, electronic payroll is much more secure than manually printing and mailing out checks to employees. You also eliminate the risk of lost or stolen checks from mailboxes, and the fees associated with placing stop payments on checks and then reissuing paychecks.
- Number of employees. As a general rule, the more employees you have, the more sense it makes to do electronic payroll. There is less potential for error, and some services allow employees to access their payroll information online.
In the end, employers will have to take all factors into consideration before deciding to spend the money on electronic payroll.