Webtimeclock Blog

Is payroll really that hard?

Sep 26, 2023
Payroll itself should not be hard to understand. It's the total amount of money a company pays its employees per period. Periods are usually weekly, biweekly, semimonthly, or monthly.

For example, if an employee makes $15/hour and works 40 hours in a week, they should be paid $600 for weekly payroll. And further, if a company has 4 employees each making the same amount, then the company's payroll is $2400.

That part is fairly simple, right?

But what makes it complicated?
Our US tax system. Unless you are an accountant or bookkeeper who specializes in payroll, then running payroll can be hard. That is, if you consider calculations of tax rates, forms that need to be completed, and payments that need to be submitted on time to various tax agencies such as the IRS.

Each employee paycheck is taxed. Tax amounts such as income, Social Security, and Medicare are withheld from the employee's paycheck as liability to the employer. The employer is taxed too. In turn the employer pays these taxes to the government.

It wasn't always this way
To give you an idea, in 1862 President Lincoln signed a law to help pay for Civil War expenses that levied an income tax of 3-5% of income. But because of public opposition, Congress cut that rate in 1867. So instead, 90% of all US revenue came from sales of liquor, beer, wine, and tobacco.

It wasn't until 1913 when Congress ratified the 16th Amendment, which allowed Congress to lay and collect taxes on incomes... all motivated from the threat of war. The form 1040 was also introduced that same year.

To make even more complicated
Payroll tax penalties. In 2022, the IRS collected over $13 billion for payroll tax penalties alone. But keep in mind that payroll tax penalties can also incur from the state level too. How does this happen? By not staying in compliance.

A few tips to avoid payroll tax penalties
  • Deposit your payroll taxes to agencies on time. Don't be late
  • Keep accurate and complete payroll records
  • Watch for any federal or state law changes
  • Properly report wages and withholdings
  • Properly classify your employees and/or contractors

Knowing this, should you do payroll yourself?
Yes you can, and many do. If your company has the resources to do this in house, then it might make sense to take on the task. But consider the costs... outsourcing your payroll will likely reduce your time and costs, not to mention help avoid penalties by staying in compliance.

How Webtimeclock can help
Webtimeclock is not only time clock software, we are also a full-service payroll provider. With us, employee hours are integrated with our payroll system. Here are a few ways we make it easier.

  • Web-based company and employee onboarding
  • Automatic ACH payments to both employees and tax agencies
  • Tax rate calculations for all 50 US states
  • Reports such as pay stubs, 1099s, w2s are all available in your account
  • Time tracking fully integrated with payroll

Yes, payroll is hard if you do it yourself, but it can be learned. It requires time and energy to process, maintain records, and ensure compliance. If you are up to the challenge, great. If you rather spend more time on products or services instead, we can help.

Webtimeclock is an online time clock plus optional online payroll. Have questions? Contact our support team, or call us at 1-800-450-2692. Sign up today for your free 15-day trail. We are located in San Diego (Carlsbad), CA USA.