Why Use Small Business Payroll Software for Your Business?

For a small business, the task of processing payroll for employees can be complicated and time consuming. However, this arduous task can be made simpler by employing the use of small business payroll software. For example, this type of small business finance software is capable of performing the task of withholding taxes, updating vacation and sick pay, and deducting employee-contributed payments for benefits. Convenience is one of the primary reasons why numerous small businesses software for handling payroll functions. Furthermore, incorporating the use of this software in your weekly payroll runs can reduce the cost of performing it manually, in house by potentially more than half.

Payroll software’s functionality is to be desired and can handle a lot of your employee related responsibilities. Many these also provide the capability of handling tracking contributions to retirement plans, as well as managing direct deposits. Most small business accounting software designed with payroll functionality can also generate monthly, weekly, or daily reports for the entrepreneur whenever you need them. Other capabilities of this finance software include calculation of employee tax obligations and preparation of W-2 forms for the business’s employees as well as 1099s for vendors.

Accuracy and compliance are the final two reasons why you should consider using payroll software in your organization. For instance, the manufacturer of a small business payroll software program knows that their product must be reliable if they would like to retain the business of their clients. Compliance in this sort of payroll programs ensures that your business complies with an array of state and federal legal obligations. This ultimately saves your business money on legal fees.

Here are some tips for choosing your software for the payroll function of your small business:

When purchasing business finance software, try to research at least three or four different programs before making your investment. Most manufacturers offer demos giving you a chance to see how their software works and if it meets your business requirements.

It could also prove beneficial for you to speak with other business owners who have previously used the software you are considering purchasing. This will allow you to gauge a consumer’s previous experiences with one particular brand.

You should ensure that the software program you choose has a reputation for complying with federal and state laws, to protect you against any future legal problems.

When you choose the right small business payroll software, you will encounter a world of convenience and functionality that you might not have known existed.

Can Small Business Finance Risks Be Measured?

Managing business finance risks is a top priority for some small business owners, but there are a number of reasons why this activity is not even considered by a large number of small businesses. Some of the possible explanations are noted below, but business risk is an unavoidable and critical issue regardless of the rationale for not actively taking steps to curtail it. The fact that many of these risk problems could be totally avoided with a nominal amount of effort in most cases only adds to the potential mystery of why there is not more risk control at the small business level. Here are three possibilities to explain what might be going on when many small businesses largely ignore risk management:

  1. A trusted advisor, banker or manager suggests that it is not necessary to be concerned.
  2. There is a lack of understanding as to why it might be important to analyze financial risks for commercial financing.
  3. Time management issues have led to a conclusion that there is not enough time to worry or do anything about this.

In addition to these three reasons, each company can have numerous unique factors that contribute to risk measurement being assigned a low priority. Two explanations that have been heard more often since the recent banking crisis are a variation of the following questions:

  • If the big banks cannot manage financial risks, what hope is there for small businesses to get these complicated problems under control?
  • If my banker is not able or willing to help with managing the business financing risks, who can help if there is not a qualified individual in my company to do this?

Because of questions and realistic concerns like this, it is not surprising that the issue ends up on the back burner. But that does not mean it is the best solution for handling the problem. Business finance risk management often requires personal involvement before a small business owner understands what the issues and problems are. This is not unlike many situations in which active participation leads to better comprehension of the subject matter. It seems to be true whether we are talking about learning a foreign language or getting a better grasp of how to reduce business risks. Here is an anonymous quote that helps to reinforce this observation:

  • “I hear and I forget. I see and I remember. I do and I understand.”

As a final note regarding the question asked in the title of this article, commercial borrowers and business managers are likely to have more success in assessing business finance risks if they assume a personal and active role in risk management.

Obtaining Small Business Loans

Obtaining small business loans is tricky unless you are well prepared. Whether you are applying for a loan from your local bank, credit union, or some other source, you need to do your homework first to ensure that your loan application is successful. Most banks and other creditors consider small business loans risky especially in the initial years of the business. So, you have to work doubly hard to convince them that your business idea will succeed, you have a good business plan, that you are willing to invest your time and money in the venture, and that the venture will have sufficient cash flow to service the loan.

When looking at small business financing, most bankers check if the entrepreneur has also invested in the venture. They expect you to bring in between 25 and 50 per cent of the money needed for the start-up. The banker sees no reason to risk their money unless you are willing to risk some of your cash by way of capital.

Another reason why many start ups are denied small business credit is the lack of a convincing business plan. Before you go to meet potential lenders, you need to firm up your business plan. You need to show the lender exactly what their money will be used for and how you plan to repay the loan.

If you are a merchant, you can apply for a merchant cash advance, where the money borrowed can be used at your discretion. However, you do need to show regular sales and the potential to increase sales after the borrowings.

When in need of small business loans try approaching the Small Business Administration for help first. If they are willing to underwrite your loan amount, banks and other small business lending institutions will be more willing to lend to you. This is because their risk is lower. You can even try negotiating for a lower rate of interest.

When you need business credit line for operating expenses or to expand your business by purchasing more stock, it helps if you can offer the lender some collateral. If your business has tangible assets such as real estate or machinery, now is the time to use them to get credit at a lower rate of interest.

When applying for small business loans it is important to keep in mind that the primary concern of the lender is your ability to repay the loan. If you are able to convince potential lenders on this point by presenting a sound business plan and a repayment schedule you are more likely to obtain the loan. Yet another thing that bankers and lenders check is the personal credit rating of the borrowing entrepreneur. If you have not done so yet, get your credit rating reports and ensure that they reflect positively on your willingness to repay loans. By taking these very essential steps, it will be easy for any entrepreneur to obtain loans for their business needs.