What is Bookkeeping? Business Owner’s Guide

Some payroll services offer automated payroll, so you can set worker pay and employees can track their time (if necessary) and the service runs payroll on schedule. The services let workers enter direct deposit information, and you connect a business bank account on the employer end, so payroll runs without you having to print and deliver checks. Sage 50cloud Accounts is a hybrid as it is a desktop system that has a cloud element for data storage and access. It also comes with expense management functionalities that include bank feeds and mobile payments. In addition, it can connect to bank accounts and give access to financial reports from any online device.

A professional payroll company can help save a business owner’s time, allowing them to focus on their business and customers. But to create a system that can accomplish this, it’s important you know enough to know what to ask for from your payroll provider and if your provider is delivering what was promised. Payroll compliance may seem complex, true, but the right HR management tools help businesses manage an otherwise taxing manual process. Organizations should consider using tech — ideally available in a truly single software — to their regulatory burden. You can reduce miscommunication by working with in-house bookkeeping and accounting staff. The IRS mandates that businesses hold onto payroll records, including payroll registers, for at least four years.

What does a virtual bookkeeper do?

Forbes Advisor selected these services based on their service options, pricing, customer service, reputation and more. Payroll accounting refers to the system that organizations use to keep track of employee wages, benefits, payroll taxes and types of deductions. This information is used to create financial journal entries recorded on a GL for financial reporting and business-related purposes. After determining payroll costs, you’ll need to pay the taxes owed for a specific period of time, such as quarterly or annually. This provides the government with a record of annual wages, federal and state taxes, health savings contributions and 401(k) contributions. Making the move to all-in-one, self-service systems promotes transparency and provides greater control over interactions with employees and data.

A good payroll system must be accurate and timely, both in issuing pay to employees and keeping records. A poorly managed payroll system runs the risk of dissatisfied employees, high turnover and costly tax miscalculations that can rack up government penalties and interest. Payroll registers contain extremely sensitive data about your business’ finances and employees’ personal information. For this reason, you should take steps to keep your payroll registers secure and restrict access only to a handful of authorized personnel. For security purposes, we recommend staying away from physical registers or Excel spreadsheets and instead opting for accounting software with features like two-factor authentication. Online bookkeeping services might be the exact solution you need to save both time and money.

NerdWallet’s picks for the best online bookkeeping services

However, if your business needs additional systems beyond just calculating, issuing and recording payroll, that will mean more setup time. Additional systems your business may need include hiring tools, employee manuals, benefits packages, scheduling tools and time management tools. A bookkeeper’s work includes preparing your financial reports and handling the day-to-day recording of financial transactions for your business. Their tasks are essential to keep your organization up and running without going into the red. A lot of bookkeepers work with online bookkeeping software like QuickBooks. Its pricing can be a bit confusing as there is a sliding scale based on not only the accounting basis but also the amount of monthly expenses and the frequency and type of services you need.

Most laws that impact payroll compliance will come paired with a specific deduction. Overtime pay refers to a higher rate employers must pay hourly employees for working beyond normal working hours. Generally, “normal working hours” refers to anything over 40 hours a week.

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The team at Merritt works in QuickBooks, which is helpful for easy handoff to your accountant and in case you decide down the line to bring your bookkeeping in-house. Katherine Haan, MBA is a former financial advisor-turned-writer and business coach. For over a decade, she’s helped bookkeeping and payroll services small business owners make money online. When she’s not trying out the latest tech or travel blogging with her family, you can find her curling up with a good novel. If you want your business to save time and money, then you should consider hiring a bookkeeping service.

• Bookkeeping tasks involve tracking and recording a business’s financial transactions.
• You must have an estimate in mind that you are willing to pay monthly or annually to meet your payroll needs.
• We evaluated whether the online bookkeeping service offered tax and consulting, and the scope of those services.
• At first glance, bookkeeping and accounting may seem interchangeable.
• Payroll noncompliance can create an opportunity for costly lawsuits and their subsequent settlements or judgements.

For instance, the ACA only applies to organizations that employ 50 or more full-time employees (including the full-time equivalent employees based on the hours they work). A bookkeeper might be enough to have on your payroll if you’re just starting out. But you might want to hire an accountant to help set up your initial books and processes for your bookkeeper to use.