Payroll

1. 1

   Seventy-two (72) percent of small-business employees work full-time. Forty-five (45) percent of small-business owners pay their full-time employees weekly; 26 percent pay them every other week; 13 percent, twice a month; 6 percent, monthly; and, the remainder at other intervals or differing intervals for different full-time employees.

2. 2

   Ninety (90) percent pay their part-time employees at the same time that they pay their full-time employees.

3. 3

   Most small employers (64%) prepare payroll in-house. However, 19 percent use a payroll services company and another 14 percent hire an outside accountant or bookkeeper to prepare theirs. Those with the smallest enterprises are most likely to do payroll in-house and those with the largest to send it out. Even then, half of the largest, those businesses employing 20 or more, do payroll in-house.

4. 4

   The owner/manager is the person who most often (55%) does payroll when it is prepared in-house. An employee does it in 29 percent of cases and an unpaid spouse or family member in 14 percent.

5. 5

   Only 62 percent of those doing payroll in-house use an electronic spreadsheet of some kind to calculate payroll; 33 percent have their payroll system electronically tied to their accounting software. Size-of-business is highly associated with a computerized payroll system.

6. 6

   The most common reason given (37%) for doing payroll in-house is that it is the cheapest way. Owners of the smallest are disproportionately likely to mention this reason. Another 32 percent say keeping payroll in-house gives them greater control and better oversight.

7. 7

   The data to prepare payroll is often sent to vendors on paper rather than electronically. About half who use an outside accountant or bookkeeper submit their payroll records on paper. One in four who use a payroll services company submit theirs on paper.

8. 8

   The most frequently cited reason for using a payroll service company is that it takes care of everything; it is comprehensive (45%). Other common reasons include: the most effective way to do payroll (17%), allows smoother work flow for in-house personnel (14%), and yields fewer mistakes or errors (11%).

9. 9

   Forty-two (42) percent report deposit federal payroll taxes quarterly, 27 percent monthly, and 13 percent more frequently.

10. 10

    Twenty-six (26) percent offer their employees an option to deposit their payroll checks directly into a checking or savings account. Fifty-seven (57) percent of employees in those firms take advantage of the option.

11. 11

    Sixty-three (63) percent of small employers who have direct deposit for employees say it has been generally helpful to the business compared to only 1 percent who consider it a hassle. The principal reason for having or not having direct deposit is employee interest or lack thereof.

12. 12

    The W-4 is one of the least burdensome paperwork requirements of the federal government.

Volume 6, Issue 1, 2006
ISSN 1534-8326

William J. Dennis, Jr.
NFIB Research Foundation

• 6Do you have direct deposit for employee payroll checks, that is, do you give your employees the option of having their paychecks automatically deposited directly into their bank account? Top 100
• 1Of your ______ (number) employees, about how many are full-time?
• 2How frequently do you pay your full-time employees?
• 3Do you pay your part-time employees with the same frequency that you pay your full-time employees?
• 3aHow frequently do you pay your part-timers?
• 4Do you do the payroll in-house, have an outside accountant or bookkeeper do it for you, or do you hire a payroll service company for that purpose?
• 4aIn your business, who does the payroll?
• 41aAbout how many hours per pay period does it take to make out the payroll, including reviewing time cards or similar data, calculating pay and withholding taxes, preparing the checks, and other associated tasks?
• 42aADo you use some type of electronic spreadsheet listing the employees by name, etc., their gross pay, tax deductions, other deductions if applicable, and net pay?
• 42aBIs your payroll system electronically tied into a larger accounting system?
• 42aCDo you print the checks instead of making them out manually?
• 43aWhy do you continue to do your payroll in-house? Is the most important reason because:?
• 4bApproximately, how much does the outside accountant or bookkeeper charge you every time he or she does your payroll?
• 4b1Do you pay him or her a flat fee or an hourly fee to do it?
• 4b2Do you send your payroll records to the accountant or bookkeeper in electronic or paper form?
• 4b3Does the accountant or bookkeeper manage the financial transactions for you, such as tax deposits, or do you conduct that part of the process in-house?
• 4cApproximately, how much does your payroll services company charge you per month for the service when the company does your payroll?
• 4c1Do you send your payroll records to the payroll services company in electronic or paper form?
• 4c2What is the most important reason that you choose to engage a payroll company rather than doing your payroll in-house? Was it because it is:?
• 5How often do you remit payroll taxes to the federal government?
• 5aDo you use an Internet banking arrangement that allows you to remit your payroll taxes electronically?
• 6aAbout how many of your employees use direct deposit?
• 6bDo you allow employees to make direct deposits to more than one account?
• 6b1What is the maximum number of accounts that an employee can have his or her money deposited into, or has that issue never arisen?
• 6cCan two or more deposits for a single employee be sent to two or more financial institutions?
• 6dWhat is the most important reason that you instituted direct deposit?
• 6eHas direct deposit been helpful, a hassle, or inconsequential to your business?
• 6fWhat is the most important reason that you do not have direct deposit? Is it:?
• 7Considering the frequency of employee changes and any administrative issues for you, are W-4 changes one of the most difficult or one of the least difficult government paperwork burdens you have? Is that strongly or not so strongly?
• 8Do you have any employees who claim eligibility for the Earned Income Tax Credit and submit form W-5 to you?
• 9Do you offer your employees a retirement plan?
• 9aIs it a 401(k), a SIMPLE plan, profit-sharing, a SEP plan or something else?