If you look up online payroll reviews, one of the major advantages you’ll see is “cost savings.”
Virtually every online payroll review explains how much money your business can save by switching to online payroll.
But how much money can you actually save? Where will you save money most? Here are some of the ways in which you can save money with online payroll:
Avoid Costly IRS Tax Penalties With Online Payroll (10% to 100% of Amount Owed)
Avoiding IRS penalties is one of the major cost savings advantages of online payroll. Thanks to your online payroll, you’ll receive reminders before all important payroll tax due dates.
Those due dates include January 31, which is when Form 940, Form 943, Form 944, and Form 945 are due for applicable businesses. Form 944 is also due on April 30, July 31, and October 31, which is why it’s called the Employer’s Quarterly Federal Tax Return statement.
Other due dates include February 28 and March 31. The February 28 due date applies to paper-submitted forms, while the March 31 due date applies to electronically submitted forms. In either case, you’ll need to submit Form 1099, Form 8027, and W-2 forms before these due dates.
Failure to meet these deadlines results in a penalty. If you don’t pay your taxes in a timely and accurate manner, then the IRS will automatically assess a 5% to 10% penalty on the amount owed. Additional penalties may be assessed. In some cases, the IRS will charge a penalty of 100% of all money owed. Worse, both the employer and the employee will need to pay this total.
If you fail to pay $1000 in employee payroll taxes, for example, then you may have to pay a 10% penalty ($100) in addition to $2000, which is $1000 from both the employer and employee. And of course, you still have to pay the original amount owed.
Online payroll software notifies you before all forms are due. In fact, some payroll software even fills out these forms on your behalf with accurate data – which means all you need to do is click ‘Submit’ to file forms electronically.
If you’re subscribed to cheaper payroll software, then you’ll still receive notifications before tax and form deadlines. However, you may need to manually fill in these forms before filing them to the IRS.
Want to avoid tax penalties and IRS fines? Payroll software is an excellent way to do that. In fact, on plans like the Intuit Full Service Payroll, Intuit offers a “no tax penalty guarantee”.
Save Money On Accounting ($200 to $600 Per Hour) When You Use Online Payroll
Accountant costs vary widely, but they’re generally not cheap. Across the “Big Four” accounting firms (Deloitte, PwC, Ernst & Young, and KPMG), an average CA will cost approximately $250 to $350 per hour.
A junior accountant will cost a little less than that, while a senior manager or partner with years of experience can charge over $600 per hour.
Obviously, accountants aren’t cheap. Thanks to today’s free payroll software, you can save thousands of dollars on the costs of accounting.
When you subscribe to payroll software, tax season becomes extremely easy for your business. You may not need an accountant at all, or you may not need to hire an in-house accounting department.
Some businesses hire an accountant to handle all payroll taxes and tax information. Other businesses choose a manager or employee to run payroll every payroll period. No matter how your business works, you’re going to save money with payroll software. You can avoid the costs of an accountant or free up an employee to focus on other work.
Avoid The Costs of Data Recovery With An Online Payroll Service Provider
Online payroll stores all your payroll data in online servers. Some payroll companies use cloud infrastructure, while others do not. In either case, your payroll provider will regularly back up your payroll data to ensure it’s never lost.
If you mess up your payroll data – like delete an employee or edit information – you can easily recover it through the cloud.
If you use traditional desktop-based payroll software, then your payroll data isn’t very secure. What happens if your computer gets hit by a virus or malware, for example? What happens if the hard drive crashes?
In those cases, you may need to pay for data recovery. Data recovery costs vary widely. Some companies charge an hourly rate – like $45 to $200 per hour. However, if your hard drive was exposed to fire, water, or other extreme damage, then data recovery firms can charge thousands of dollars.
With online payroll, your computer can still receive viruses and experience hard drive failure. However, you’ll still be able to easily access your payroll data online because it’s not stored locally on your machine.
Bundle With Bookkeeping Software For Additional Savings With Intuit Like QuickBooks
Using this method, you can save 50% or more off the cost of both services. QuickBooks + Payroll subscriptions start at around $50 per month.