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PPP Loans and Payroll Software: What You Need To Know

PPP Loans and Payroll Software: What You Need To Know 0

The COVID-19 pandemic has forced many small and mid-sized companies to completely change the way they operate. Some companies have had to let staff members go, while others have had to enforce a full shutdown.

Either way, companies are hurting right now. Customers aren’t shopping the way they used to and businesses aren’t making the amount of money necessary to maintain daily operation. If that’s not enough, this all has a negative effect on the economy we all rely on.

The government has taken notice and is providing a variety of funding options for small and mid-sized businesses. One of those options, the Paycheck Protection Program (PPP), is included in the CARES Act and is designed to keep employees on payroll throughout these difficult times.

For companies with 500 employees or fewer, the PPP allows you access to the Small Business Association (SBA) loans. Not only does this give you the funds needed to keep employees on the payroll, but it allows you to bring back those you were forced to let go.

The great thing about this program is the potential loan forgiveness or repayment deferral if certain requirements are met. When used to its full advantage, it could be the program that saves your business from going under.

A Brief Look at the PPP Loan

Since the PPP loan is still new to most business owners, there’s a lot of confusion about what it is exactly, who’s eligible, how to apply, and what the benefits are. Don’t worry, we’re going to break it all down for you below so there’s no guesswork involved.

First off, let’s talk about eligibility.

We mentioned how it’s available to businesses with 500 or less employees, but those businesses must be classified as one of the following: Accommodation or Food Services, Tribal businesses, independently-owned franchise, self-employed workers, independent contractors, gig workers, and sole proprietors.

In addition to that, you need to be able to prove that your business has been significantly impacted by the COVID-19 pandemic.

Now, let’s talk about loan forgiveness.

In order for the PPP loan forgiveness to work, it’s imperative your business keeps all full-time equivalent employees on payroll for 24 weeks following the loan acceptance -- or the end of the year, whichever comes first.

In addition to that, businesses must use at least 60% of the loan for payroll expenses and no more than 40% for other expenses (rent, utilities, etc.). Your business can only count 24 weeks of coverage, with December 31, 2020, being the final date for eligible expenses.

If you meet the requirements, some or all of the loan will be forgiven -- which means this can do a lot for your business when done properly.

How Can the Best Payroll Software Help?

Having an HR payroll software that’s integrated with your business’ operations is essential to owning a business. It keeps everything in one place and allows you to worry less about errors -- which are more important now than ever.

In addition to that, the best payroll software helps you fill out your PPP loan application and allows you to keep track of expenses when calculating loan forgiveness. It’s an extremely valuable tool when managing the PPP loan process throughout the rest of the year.

There are two main numbers you’ll need to get from your HR payroll software when filling out the loan application -- the average cost of your payroll each month and the number of employees you have.

The average cost will give the government an idea of how much funds you need, while the employee count will tell them how many employees you need to keep when maintaining loan forgiveness.

Calculating PPP Loan Application vs. Loan Forgiveness

One of the most confusing things with the Paycheck Protection Program is the difference between calculating your PPP loan for the application vs. calculating the amount of loan forgiveness you receive.

There are four main terms that come into play for both sides -- the calculation period, payroll costs, non-payroll costs, and headcount.

When calculating the loan application, the calculator period is for 2019 or the rolling year. You’ll take the average monthly payroll costs and the actual non-payroll costs -- as well as the actual headcount of employees.

On the other hand, calculating loan forgiveness works a little differently. The calculation period is for either 8 weeks or 24 weeks -- or December 31, 2020, whichever comes first. The payroll costs forgiven are the actual costs, as well as the non-payroll costs. When it comes to the headcount, only full-time equivalent employees are eligible for forgiveness.

What Constitutes as Payroll and Non-Payroll Costs?

When calculating loan forgiveness, it’s imperative you know what costs are covered and which are not. Failing to understand this can lead to miscalculations, which can leave you in a hole when you aren’t forgiven as much as you were expecting.

In terms of payroll costs, the following are included: salary, wages, commission, tip, vacation time, parental leave, medical leave, family leave, sick leave, allowance for separation, group health care benefit provisions, insurance premiums, retirement benefits, and taxes assessed on employee compensation.

Non-payroll costs include rent, utilities, and the interest paid on your mortgage.

Are You Eligible for Loan Forgiveness?

Knowing if you’re eligible for loan forgiveness is probably the most important thing you need to know when managing the Paycheck Protection Program. There are certain requirements you must meet before being eligible.

First off, you can’t have any reduction in the headcount of your employees. If you had 176 employees, that’s the minimum you can have when you apply for loan forgiveness. Anything less will result in less forgiveness.

Not only that, but forgiveness will be reduced if any employees receive a 25% or more reduction in salary or wages. This is true for anyone who makes less than $100,000 per year.

Outside of that, you’ll need to use at least 60% of the funds for payroll costs and no more than 40% for non-payroll costs. This will need to be proven when you apply for loan forgiveness. Keep in mind, you must apply for forgiveness, as it won’t be automatically applied to your loan.

To make sure you’re properly prepared for the application process, it’s important to keep detailed records of how you spend the funds you receive, make sure they’re being used for the right things, and make sure you keep a proper headcount of employees throughout the duration of the loan.

How Can Consultants In-A-Box Help?

Of course, having the best payroll software available to you helps make this process much easier. You can manage payroll costs, HR operations, and even expenses -- all in one integrated system.

If you need help managing your Paycheck Protection Program loan and the loan forgiveness that comes with it, Consultants In-A-Box can help.

We provide practical, logical, and simple solutions for businesses of any size. We ensure these systems support everything you need for the PPP loan forgiveness. We will be by your side the entire way in case you have questions or concerns.

Contact us today to learn more about how we can help you and your business find success during these difficult times.

 

Do Small Businesses Need Payroll Software?

Do Small Businesses Need Payroll Software? 0

When you work for someone else, payday is one of those days you look forward to every month. When you own your own business, however, payday becomes one of those days you dread -- especially when you don’t have the necessary tools and payroll software to get it done right.

If you want to avoid all the late hours, booming headaches, and frustrating nights spent trying to make sure your business’ payroll is perfect, finding an efficient payroll software can solve all your troubles.

Of course, not all payroll software is created equal and you’ll have to take a lot of things into consideration when choosing the right one for your small business.

Independent Contractors vs. Employees

Your employees are generally broken down into two major categories -- the independent contractors and the employees. Ideally, the best payroll software will have features that cater to both categories, giving you an all-in-one solution.

With that being said, independent contractors are often much easier to handle. You’re not on the hook for paying their taxes and simply need to have an efficient way of getting the money to the contractor.

Still, payroll software can help you keep track, schedule, and manage these transactions. It can also assist with 1099s and storing contracts.

With employees, quality software for payroll becomes a necessity. There’s a lot that needs to be managed with employees and the software is your gateway to keeping everything accurate, accessible, and organized.

Benefits of Payroll Software

Most small business owners don’t feel they need payroll software, especially if they don’t have a long list of employees to manage. That’s why we can understand when an owner is hesitant to jump aboard the payroll software train.

Still, finding the best payroll software for small business owners comes with a wide range of benefits -- no matter the size of your company. We’re going to discuss three of the most prominent benefits below and how they can have a positive effect on your business.

1.   Saves Time

Think about all those long nights you spend doing math and entering data into various sheets several times just to make sure everything is correct. Think about the time you spend writing checks, preparing envelopes, mailing checks, and wiring funds.

Now I want you to imagine if you had all that time to spend doing something else. Wouldn’t that help you stay a little more productive every month and relieve some of that end-of-month worry you always had?

The best payroll software for small business owners can turn several hours worth of work every month into just a couple minutes of easy work. That’s what we call powerful.

2.   Avoid Mistakes

One of the things that make small business owners nervous when doing payroll is mistakes. Everyone understands the magnitude of a payroll mistake and how it can negatively affect the employee, but human errors are more common than you think.

Did you know the IRS sends out nearly $5 billion in penalties every year due to mistakes made with employment taxes? That’s a lot of money and there’s a good chance most of it could be avoided with the right tools and resources.

Quality payroll software can help you stay on top of regulations, rules, laws, withholdings, scheduling, and so much more. It takes any and all guesswork out of the equation.

3.   Shift Focus

As a small business owner, you have a lot on your plate. Chances are you didn’t start your company to do payroll and it’s definitely not something you want to be spending hours on end doing.

The last thing you need to worry about is the payroll process -- especially mistakes that could’ve been avoided during that process. With the right payroll software, you finally have the ability to focus solely on growing your company. 

Signs Your Small Business Needs Help

Knowing when it’s time to find a payroll provider or software can be a tough call for a business owner. On one hand, you’re telling yourself you can continue to manage it without a problem. On the other hand, you can’t wait to rid yourself of the added responsibility.

The truth is any business with several employees can benefit from payroll software. Still, it doesn’t mean every business needs to invest in payroll software. To help you better determine whether or not you should consider this addition to your operations, we’ve listed some of the major signs your business is ready for help:

  1. Automation is one of the easiest ways small businesses are innovating to create a more efficient and productive environment. Investing in payroll software is one step in the process.
  2. You might want to consider payroll software if you find it difficult to manage all the unique administrative tasks when doing payroll. It can handle bonuses, weekly schedule, monthly schedule, benefits, and much more.
  3. Small business taxes can be a nightmare for any owner. If you agree with this, payroll software helps simplify this process so you can sleep better at night when taxes are due.
  4. If your employees are constantly asking for access to their paycheck history or constantly have requested to change personal information, payroll software takes a large amount of weight off your shoulders.
  5. Businesses are unique in the different techniques they use to operate their company from top to bottom. If you need a way to integrate your payroll with other technology in the office, payroll software can help.

A quality payroll software comes with great customer support to ensure your demands are met at all times. This gives you confidence in your payroll and allows you to feel much better about the future of your business.

Consultants In-A-Box Is Here to Help!

If you’re searching for the best payroll software and need a provider that stands by their clients, Consultants In-A-Box is ready to serve you. We offer a quality solution to your payroll needs and ensure our clients are met with the most courteous customer support possible.

Contact us today to discuss how we can assist your company with its payroll needs. We can’t wait to hear from you!

              

How to Choose a Payroll Provider

How to Choose a Payroll Provider 0

Ensuring your business maintains a proper and effective payroll strategy is essential to the long-term success of your company. While many owners struggle to do this themselves, a payroll service provider can help take the weight off your shoulders.

You’re the business owner. You shouldn’t have to worry about managing payroll -- that’s someone else’s job. The more time you spend worrying about payroll, the less time you spend building the future of the company.

Investing in a payroll provider helps build employee loyalty and shows you take the culture of your business seriously. Since every provider claims to be the best payroll provider for small businesses, we’re going to discuss some of the major things you should look for in a payroll provider.

Here are our top-10 characteristics of an effective payroll service provider!

1. Payroll Taxes

There are a lot of reasons why you might consider a more streamlined payroll strategy, but one of the most important is automation. Without it, you open yourself up for errors when deducting payroll taxes because most business owners aren’t experts when it comes to this.

It’s not your fault, you have better things to worry about. That’s why payroll software should be equipped to do this for you with extreme precision. You’re not a tax professional and you shouldn’t have to be.

Look for software that is regularly updated, as well as one that supports 401(k) deductions, HSA deductions, and wage garnishments.

2. Tax Filing Errors

Every business owner understands that perfection is always the goal, but it’s rarely the outcome. Errors happen, mistakes exist, and no one -- not even software -- can run away from them. Unfortunately, that won’t stop the IRS from charging you a penalty or your employees from getting restless.

In the event your provider makes a mistake, it shouldn’t be labeled as your fault. Always ask your provider what happens when an error occurs and whether or not they will take responsibility for the error.

3. Security

Anytime you’re dealing with payroll, you’re handling extremely important and confidential information. Whether it’s an employee’s new hire paperwork or earnings, you have to be confident your provider isn’t prone to security attacks.

It’s best to work with a provider that limits work with overseas companies to prevent the risk of hacking. They should also have a proactive plan in place for when an attack occurs and how to eliminate the threat immediately -- ideally before it strikes.

4. Paycheck Processing

All employees receive a paycheck for the work they complete, but not all employees are paid similarly. Some are paid a salary, some are hourly, and some are paid a fixed-price amount for their work. Even then, some employees are paid different amounts depending on experience.

When choosing a provider that’s right for you, it should have no problem keeping up with all the different employees you’ve hired over the years. If it can’t keep these things organized for you in an efficient manner, find a new provider immediately.

5. PTO & Vacation Days

Manually tracking days off, vacation days, paid time off (PTO), and sick days opens the door for more errors and mistakes. The last thing you want is an employee taking off more time than they’re allowed to due to a counting error on your end.

When looking at the best payroll providers for small businesses, they should have the capability of tracking these days off, as well as a way for employees to easily request time off. Having everything in the same place means you only have to do a brief review instead of blocking out a whole day to determine the schedule for the week.

6. Employee Access

A truly effective provider makes it easy for any employee to access their account at any time of the day. Having this option available to an employee avoids any delays when that employee needs a pay stub or is curious about the amount of time they can request off.

Much like an owner should have these things easily available to them, so should the employee. They experience life changes frequently, so having access to their account can also help with changes of address and changes to new hire paperwork.

7. Payment Options

Did you know 4 out of 5 employees prefer direct deposit as their payment method of choice? Having a provider that supports this payment option is critical to keeping your employees satisfied and also leads to less frustration on your end.

At the same time, there’s still that 1 of every 5 employees that prefer a physical check. With that being said, your provider shouldn’t leave them in the dark. Having the ability to change payment options and having several options available to the employee is essential.

8. Integration

Most business owners have their own way of keeping track of their payroll, accounting, and other financial aspects of their business. Your provider is sure to bring some new concepts and changes to the board, but that doesn’t mean you should have to do a complete overhaul of your process.

Your provider should easily integrate into your current operation and shouldn’t impede on anything happening in your company at that time. A seamless transition means fewer errors from the get-go, which is crucial.

9. Customer Support

It doesn’t matter what product or service you’re talking about, there comes a time when you need customer support to explain something or answer a question. That’s why customer service is so important when searching for a payroll service.

The right service provider won’t have you listening to music when you call them. Instead, you’ll hear a real human’s voice ready to assist you immediately. No strings attached and no distractions, just pure customer support.

10. Costs

When getting started with a service provider, you don’t want any surprise expenses along the way. After all, that’s one of the reasons why you’re switching to a service provider.

To ensure your provider doesn’t try to overcharge you or stay quiet about hidden charges, you should understand what the fees are the following things: tax filings, W2s, 1099s, changes, cancels, direct deposit, check printing, employees that don’t work in a given time period, integrations, PTO tracking, HR features, and annual fees.

You’ll also want to ensure you understand the pay scheduling and whether or not the fees are subject to change.

Now that you have a much better idea of how to find the best payroll providers for small businesses, it’s time to put that knowledge to use for your business. If you’re ready to get started with a provider that meets your needs, contact Consultants In-A-Box today.