Should a small business consider using a payroll service or software?

The construction foreman could build anything, though. He was absolutely integral to that part of our business, and without him, I don’t know if that part would have survived his departure.

  HR Payroll   Apr 22, 2024   106  Add to Reading List

I’m a firm believer in software, and QuickBooks is the software to use. — This is not an ad for Intuit. In the early 2000s, when I was in business school, we studied Peachtree (bookkeeping software). I’m not even sure if it had a payroll function. Point: when I brought up to my CPA which software I should use, Peachtree or QuickBooks, she scoffed at Peachtree and said it was crap and said the only thing I should consider was QuickBooks. — Her advice worked well for me. Just make sure you keep it updated, as the law that affects doing payroll changes at the state and federal levels from time to time, and you don’t want to be doing payroll incorrectly (i.e., in an outdated fashion).

One other thing I would suggest is that you consider not doing it online. My CPA, again, taught me this. — If you want to put your own personal information out there in the figurative CLOUD for malware to attack and hackers to steal, then that is your prerogative.

You have a duty to your employees to do better than that. — She does payroll for people, and all of her accounting services, are done on a non-networked, not-connected-to-the-internet PC. She backs up her work on CDs.

In my professional opinion, a small business doesn’t have to be that James Bond about it. Just make sure that you have a good password for your password-protected, private-information-containing bookkeeping & payroll files, and you should be fine. In fact, if you don’t have an internet connection on the computer(s) on which you do payroll, then you have consigned yourself to doing the updates the old-fashioned way — by CDs you get in the mail — and, I wouldn’t suggest that.

Just go shopping, get on social media, and look at porn on your personal computer — not the one on which you do sensitive business that affects more people than just you and yours.

WHY? — I just said that my CPA does payroll for companies; she offers that as a service. In my younger years, I worked at a restaurant that outsourced payroll.

WHY DO I NEED TO DO PAYROLL AS A SMALL BUSINESS MANAGER/OWNER?

→ Because it keeps you in touch with the back-office aspects of what you’re doing.

I used to be the chief of operations for one of the corporation’s subsidiaries. In addition, I was the manager of a portfolio of commercial real estate. And, on top of that, I was the CFO of the mother corporation.

In my first years there, I did payroll every week for the corporation. — I started as the main office manager, and that was one of my duties. Despite, over the years, taking on bigger roles and hiring office assistants, I got to a little over 350 consecutive weeks of payroll before I started letting a particularly bright assistant of mine take most of that over. — I still checked the payroll reports and audited them for anomalies, which I then checked about with her and with my lateral counterparts and our boss, the President of the corporation, if necessary.

I was, of course, the person who signed the quarterly reports that got sent off to the Treasury and who was responsible for the integrity of W-2s that went out, so I never completely removed myself from the payroll process.

There’s a reason for that.

My boss might call me up, when I was right in the middle of doing something, and ask me, “How much do I pay X, Y, and Z (employees)?”

He needed to know that because he was figuring a bid or estimating a job for a customer. — He didn’t know how much he paid people, even if he hired them. He’d never done any back-office work, so he relied on others to know.

So, right then and there, I needed to be able to say what $X, $Y, and $Z (/hr) were.

—

The construction foreman might be considering giving one of his guys a raise, so he’d pick up the phone and call me and ask, “Hey, how much does A make?”

Then, when I told him, he might say, “Do you think we can afford to give him a $# raise?”

So, not only did I need to know how much the person made, but he was also gathering whether he thought I’d support his raise decision.

Because I was the person who had to know our financial situation at all times, and held a dual CFO/operational-managerial role, I could give raises and bonuses on my own authority.

The President and I differed about the impact of labor costs on overall profitability, so he was going to be the person who, for a couple of reasons, usually would just say no if someone asked him for one or the other. — However, if you needed a loan or payday advance (often, interest-free), he would 99% of the time go for that. — That was just his way.

So, if someone, like the construction foreman, wanted to get one of his guys a raise, then — having no understanding of the underlying economics and cash flow situation of the corporation at the time — he had a slim chance of getting that approved by the President; but, if he’d already run it by me, and I said sure, then his chances went dramatically up.

Should a VP-level manager have access to the company’s financials?

That’s a good question, and I would think, in most situations, the answer is yes. — I only put in a contingency, there, because I’ve been in some really bad financial situations at businesses, and if you’re got one proverbial step in the grave, you might not want that information to get around to employees, customers, creditors, — anybody except the people who have to know.

Immediately, that shows that the people who do the books — the back-office work — will know more about the company’s well-being than some VP-level managers; and, at times, even the President of the corporation.

Not all operation’s managers, even if at the VP-level, are qualified to understand financials, so even if you offered cash flow and profit projections, and other sensitive information, they wouldn’t understand what they were seeing.

I have a friend who has a BBA in Management from a good Texas university. He’s the VP of a corporation, and a related side business, and he just works in the office. — You couldn’t tell him to be any different from the office manager or the other clerks who work in that office.

I once suggested to him that he print out the corporation’s financial statements (P&L, Balance Sheet, Cash Flow Statement); study them; and, get to know them. How to understand them. — He is heir to the business, and assuming the business doesn’t crumble beneath them, he will be its President one day.

When I asked him, weeks later, if he’d been working on learning to read the financials, he told me: “They just look like a bunch of numbers to me. I don’t understand them, and no — I haven’t been studying them.”

While it’s true that finance and accounting are more different majors to study than management, a business administration degree is meant to be comprehensive. — Obviously, I was taught to manage and operate businesses, not just to do accounting ratios and analytics. — I should be able to create and read a cash flow statement better than a management major, but the management major should be able to get a C on his attempt.