Small Business Payroll – The Pros and Cons of an in-House Payroll Systems

In-House Payroll System Hardware Options

This week begins the first of a three part series on in-house payroll systems. During this series, the hardware components that comprise this type of system, pros and cons of this type of system, and software options will be examined.

An in-house computerized payroll system is located on company property, and equipment may be owned or leased from a vendor. Businesses have more control over this type of system, and can tailor the security system design to meet individual needs. System operation is performed onsite by company employees including programmers, systems analysts, data entry personnel operators, system administrators, etc., providing more control to the business.

Hardware options are determined by the size of a company, requirements, budget constraints, and the need for dedicated computer systems in certain departments.

Hardware Options:

  • Mainframe Computers – largest and most powerful computers, used for the entire company. Each department links to the mainframe, sharing the resources (storage and processing) with other departments. In large companies, a separate mainframe may be dedicated to payroll processing, benefits and human resources functions
  • Minicomputers – smaller and less costly option than mainframe computers. This can be a good option for small to medium sized businesses. Again, departments share the available resources.
  • Microcomputers or personal computers (PCs) – flexible options from many vendors.

Microcomputer Networks Networks connect computers and applications. PCs are able to communicate with each other in a network, and employees can access applications from their computers. PCs share software programs, and have access to printers, modems, etc.

  • Local Area Networks (LANs) – In a LAN, computers are physically connected to each other, data is transmitted at high speed short distances, and managed by a main computer or minicomputer.
  • Wide Area Network (WANs) – In a WAN, data is transmitted over long distances using telephone lines and Internet.

Client/Server Technology Application programs are distributed by running on a personal computer. The data is on a server (mainframe, minicomputer or PC). Payroll, benefits and human resource applications are installed on PCs in the payroll and human resources departments.

Client/server applications may be comprised of a combination of these components: hardware, graphical user interface, file management system, network operating system, and communications protocol.

Data Processing Payroll and human resources data can be processed using two different methods, real-time processing and batch processing. Real-time processing allows the user to have immediate access to the data as updates are made. During batch processing, data is collected, coded in groups for processing, and returned when updates are complete. The user usually does not have access to the data while updates are made.

How to Process Small Business Payroll – Tips

Processing small business payroll is done in various ways. Some businesses choose to hire affordable payroll services for small to medium businesses. Other use small and medium business payroll software for the job. Payroll for small and medium businesses is an inevitable task that must be handled on a regular basis. Handling payroll accurately is important to avoid tax issues and keep employees content.

Companies and Individuals Providing Small Business Payroll Services

Most small businesses hire a small and medium business payroll service. Some handle the job in-person and others provide small business online payroll services. It is a cost-effective way to take care of payroll. Hiring a bookkeeper means paying a regular salary and possibly covering the cost of benefits. Using a payroll service is affordable and gives companies access to seasoned professionals.

Payroll for small and medium business managers and employees needs to be properly processed to avoid tax problems. People depend on their paychecks and are not pleased if problems arise. Businesses also rely on payroll services to get the job done correctly.

Small Business Payroll Software

Another way to handle small business payroll is to use specialized software. An employee at the company would be assigned to process payroll. This adds to the tasks covered by current employees and also limits confidentiality.

Using an outside service keeps salary details private and detached from other company employees. Management is often too busy to handle the task of processing payroll on a regular basis. While the software is designed to do the job well, it still takes time and effort.

There are various software packages available in the market that can do the job, companies can train the existing employees on this software packages or can hire part-time consultants to process the companies payroll and accounting.

Other than software packages there are various online services available on the cloud that can also be used as compare to software packages this online services will have low overhead cost because when you use software packages you will have to purchase hardware and there will be ongoing maintenance cost for this, online services pay and use services will be cheaper compare to software packages.

Payroll processing is an inevitable part of running any size company. The earnings of each worker must be documented and processed to comply with labor and tax regulations. A small business payroll service or dedicated software ensure the job is done in a timely, accurate manner.

Should Small Business Use Payroll Software

Business owners are constantly searching for new and innovative ways to decrease their costs and increase their efficiency. If you own a small business, there are many great strategies you can implement into your plans to decrease your costs and increase your productivity, but one valuable solution in particular is certainly small business payroll software. The following article will review how this software can improve your operations today.


The cost savings alone can be a very attractive benefit of using payroll software. By managing your accounts on your own rather than hiring a professional to do it for you, you can save your company thousands of dollars every single month. You can then invest the money you save into more important aspects of your company that will ultimately result in further growth and productivity in the future.

Since you will be completing the employee payment tasks on your own if you choose to use software, you will also be in a position to guarantee the accuracy of the information you record. This additional benefit can help you keep track of your operations and help you make the right decisions going into the future.


Security is another important benefit of using a secure computer program. Payroll information is generally of a very sensitive nature, but it is very important for companies to keep clear, accurate, and secure employee records. By utilizing an in-house program, you can avoid exposing this important information to hackers on the Internet and you can also protect the computer that houses the information to secure it even further.

Many small business owners love to use specially designed computer programs to manage their employees and payments, because this type of software can help them keep their records organized and accurate. Owners who keep important employee and company records on paper files often have trouble finding the documents they need when they need them. Also, owners who keep important information about their operations in a single location are at risk of losing the valuable information due to fires and other hazards.


Along with helping you keep your records organized, this type of program can also simplify all of your operations that are related to your payroll. Once you are using one of these programs, you will be able to manage employee payments in only a few short and easy steps.

You can also handle all of your tax documents using a program that offers tax filing solutions. With these programs, you can automatically calculate your taxes, create reminders to file, and you can even file your taxes online. Once you start using one of these programs, you will likely find your finances to be greatly simplified overall.

Basically, if you are looking for a great way to manage your payroll without spending a large amount of money, you should review the various small business payroll software products you can buy today. Once you have integrated payroll software into your operations, you will be able to better track your employees and your finances, but you will also be able to handle your entire operation with greater ease as well.