One of the most challenging aspects of running a small business is payroll/taxes.
Mess it up and the IRS will come knocking on your door. Do it right and you’ll spend hours every week staring at spreadsheets. The good news? Payroll software has evolved. Now business owners can automate most of the tedious tasks with just a few clicks.
Here’s the deal:
The proper small business tax tools can help you save time and money. Plus, they can spare you enormous amounts of stress.
Every Small Business Doing Payroll and Taxes Needs These 6 Software Apps:
Let’s jump in!
The plan for this guide:
- Why Small Businesses Need Payroll Software
- The 6 Must-Have Software Tools
- How To Pick The Right Ones
Why Small Businesses Need Payroll Software
Payroll software isn’t a luxury anymore. It’s a must.
Take this example: It doesn’t matter to the IRS if you employ one person or 50. The rules apply to everyone equally. File the wrong form or miss a deadline and you’ll be penalized. In fact, 40% of small businesses pay an average of $845 in IRS penalties each year due to payroll errors.
That’s a lot of money down the drain.
Payroll software makes it easy to avoid those errors. The software calculates and keeps track of deadlines and even files those forms for you. Need to send those 1099s to your contractors? Find a tool that can fill out 1099s for you – like 1099-etc filing software. You don’t need spreadsheets!
Small business tax tools can help you:
- Save hours every pay period
- Avoid costly IRS penalties
- Stay compliant with tax laws
- File 1099s and W-2s on time
- Keep your records organized
Imagine your payroll software as your safety net. It prevents mistakes before they hit your pocket.
The 6 Must-Have Software Tools
Now let’s get into the good stuff.
6 Must Have Tools for Any Small Business Doing Payroll & Taxes. Choose Ones That Fit Your Needs and Start There.
1. Payroll Processing Software
Payroll processing software is the backbone of your payroll system.
It runs your payroll.
What does that mean? It figures out how much your employees get paid, takes out taxes, and pays your employees on time. Each payroll cycle. Without you or anyone else needing to touch a spreadsheet.
The best payroll software will also:
- Handle direct deposits
- Calculate overtime pay
- Track paid time off
- Generate pay stubs
- File payroll taxes automatically
One study found that 88% of small business owners believe tax laws are too complicated to manage payroll internally. When you have quality software handling your payroll duties, it can alleviate the stress from the complicated parts.
Seek solutions that scale to your business. A team of 5 doesn’t need the same software as a team of 50.
2. 1099 Filing Software
Do you work with contractors? Then you need 1099 filing software.
Every year small businesses must file 10-99 forms with their contractors and the IRS. File after January 31 and you could face fines ranging from $60 to $340 per form.
That adds up fast.
10999 filing software takes the guesswork out of it. Simply plug in the contractor’ information, how much you paid them, and let the software calculate everything for you. Many programs can also e-file the forms right to the IRS.
The best 1099 filing tools will:
- Store contractor info from year to year
- Auto-fill forms with data you already have
- E-file directly with the IRS
- Send copies to your contractors
- Track filing status in one dashboard
If you work with more than 10 contractors, this is a no-brainer.
3. Tax Filing Software
Payroll is just one piece of the tax puzzle.
There’s also income tax, self employment tax, quarterly estimated taxes and state taxes. Tax software has it all in one place so you can file it all on time without stressing.
Why it matters:
Small business taxes just keep getting more complicated. There are new rules. New forms. New deadlines. Each year. Tax filing software helps you keep up. It stays updated on the new rules for you.
Search for a program that allows you to e-file federal, state and local taxes. Then you’ll be prepared no matter where your business is located.
4. Time Tracking Software
Ever wonder how many hours your team actually worked?
Time tracking software provides the solution. It records when employees punch in and out and take their breaks. That information then goes directly into your payroll software so you’re only paying employees for the hours they worked.
Here’s why this matters:
Overpaying employees cuts into your bottom line. Underpaying employees will land you in hot water with labor laws. Time tracking software removes the guesswork from the equation.
Bonus: most time tracking apps double as billable hour trackers if you bill your clients hourly.
5. Accounting Software
You can’t run payroll without knowing your numbers.
Accounting software tracks every dollar entering and leaving your business. It even syncs up with your payroll software to simplify tax season.
The best accounting software will:
- Track income and expenses
- Manage invoices
- Handle bank reconciliation
- Generate financial reports
- Sync with your payroll and tax tools
Still using spreadsheets for your accounting? Upgrade your books. Accounting software will save you hours each month.
6. Employee Self-Service Portal
This last one is a game changer.
An employee self-service portal allows your team members to access pay stubs, tax forms and personal information whenever they need. Say goodbye to emails requesting last months’ pay stub. Say goodbye to printing out W-2’s at the end of the year.
Employees have immediate access to whatever they need. And you free up more time to grow your business.
Win-win, right?
Bringing It All Together
Handling payroll and taxes doesn’t have to be a nightmare.
Don’t spend time reinventing the wheel. Automate the mundane. Use software to take care of the tedious tasks and focus on what matters– growing your business. Payroll software, 1099 filing software and tax filing software should be high on your list.
To recap:
- Payroll software: Handles employee wages and payroll taxes
- 1099 filing software: Files contractor forms with the IRS
- Tax filing software: Covers all your business tax filings
- Time tracking software: Logs employee hours for payroll
- Accounting software: Tracks your business finances
- Self-service portal: Gives employees instant access to their info
Select one or two tools that will benefit your business and implement those. When you have the fundamentals set up, you can integrate more tools.
Tip numero uno? Don’t wait until tax season to get organized. The more prepared you are ahead of time, the more money you’ll save in the long run.
