Why use a payroll service?

I have talked to many customers and potential customers this past year about payroll.  “Why are we not offering internal payroll in the future?” is a common question. First, let me clarify that this discontinuation only pertains to W2 employees. All 1099 contractors will still be paid through QFloors as always.

We don’t have the manpower or expertise to read and understand tax laws through all 50 states, then update the tables accordingly. For the past 15 years we have been paying a company with that expertise to provide the payroll tables for us. Our programmers wrote QFloors code that linked to this table in order to make the proper deductions and accrue the proper liabilities for each paycheck and company totals. That tax table company discontinued supplying these tables to us December 31, 2017. Without this table, QFloors can’t correctly process payroll checks.

In order for us to continue to provide internal payroll, we would have to find another company willing to provide a similar table to us---for a similar price (which wasn’t available). Then our programmers would have to rewrite the QFloors payroll module to integrate with this new table -- a lengthy and costly process. We would need to charge an extra fee to only those customers using payroll to cover these costs. Only 5% of customers were using QFloors payroll this past year. Because there are so few customers using this, initial estimates were around $300-$500 per month per customer, depending upon the company’s number of users.

At the same time that we saw our costs for maintaining and improving our payroll system skyrocket, the costs and options for external payroll services were improving significantly.  When measuring the pros and cons of internal vs. external payroll in 2018, the pros of external payroll far outweigh the cons.  The main advantages include:

1. Easy to do
2. No liability for mistakes made
3. No payroll forms to file or deadlines to meet
4. It costs a lot less than internal payroll
5. No responding to govt. letters/inquiries and no research required

I know that 15 - 25 years ago there were not many payroll service options; the service wasn’t that good and the costs were pretty high.  But if that is the last time you tried a payroll service, you need to try again.  There are lots of options today--big national companies, regional, and local.  This means that there is significant competition.  As you know, competition increases service and lowers costs in any industry.  We have seen that happen in the payroll service sector in a big way.

Payroll processing comparisons:

	QFloors/other similar	QuickBooks	Payroll Service
Time required (quarterly)	6.5 hrs	4.5 hrs	1.5 hrs
Cost of software or service (quarterly)	Not Available	$150 (+ approx $90 labor costs)	$125 (+ approx $30 labor costs)

         * These time and cost estimates are based upon a company with 5 employees on a quarterly basis.

If something costs more and takes more time to do (which costs even more because time is money) and it adds significant stress to your life, why continue to do it?

What is required to process payroll through a payroll service?

1. Sign up and get your employee information imported/entered. (one-time)
2. Each payroll login, enter salaries, hours, commissions for each employee on 1 screen. (Regular salaries, hourly rates, insurance, IRA deductions, etc. will already be there.)
3. Press the Process payroll button. (The payroll company deposits employees’ checks automatically.)
4. Generate summary payroll report.
5. Enter report total amounts (not each person’s amounts) into bill in QFloors. (This bill should be duplicated each payroll, only requiring a change to amounts, not accounts.)
6. Pay payroll bill in checkbook.

That’s it. You’re done. This entire 6-step process takes about 15 minutes each payroll period. The payroll service does the rest.

Keys to making it easy on you:

1. Make sure your payroll service has a web page where you can add your own employees when necessary and process each payroll online.
2. Make sure they have a timesheet/payroll matrix that has a list of employees on the left with fields to enter hours, commissions, and special deductions for each employee on 1 page.
3. Do direct deposit with every employee if possible. If not, make the payroll company write the checks from their account, not yours!
4. Make sure your payroll service deducts 1 lump sum from your bank account for all employee checks and taxes if possible.  Don’t allow them to write individual checks from your bank account. This makes your bookkeeping much easier.

If you have had or currently have a payroll service that is making it hard on you by not doing all these things, tell them they need to start, or you’ll find someone that will.  Believe me, there are plenty of services that are willing to make it easy on you.

We encourage you to look into outside payroll services. We have seen that in almost all cases, it is a lower-cost time-saver. If you continue to do internal payroll just to give your mother-in-law something to do, please consider finding other responsibilities for her to focus on.  It’s just smart business.