Payroll Tax Software

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What is a payroll tax program?

Payroll Tax Software

Payroll tax software is needed if you employ any employees and do not want to be concerned about maintaining paper records. Back in the day, bookkeepers would use a paper ledger system, pen, and calculator. With modern technology being so advanced anymore, payroll tax software programs abound. Some of good, some are not. There are important things to know about these software programs in order to get the most out of them. First of all, your payroll tax software usually comes in different levels. There are the basic, intermediate, and advanced levels.

Since each payroll tax software package offers different features at different levels, the following information is intended to give you a general idea about what to expect.

The basic will probably be what you need if you have less than five employees and need only standard payroll. Standard payroll means you do not need to concern yourself with income other than the hourly or salary rates. You have no commissions or bonuses to worry about, as an example. You also do not have any payroll deductions other than tax withholding amounts. Many times basic packages do not include any electronic filing options for submitting your payroll taxes, either. Also, many standard payroll tax software programs do not include any state income tax filing information.

The intermediate level of payroll tax software will be what you need when you have more than five employees involving a few payroll tax issues. Also, on the average, electronic filing of your payroll taxes is offered at the intermediate and above level. As mentioned, if you need to be involved with any state income tax, the intermediate or advanced levels of payroll tax software will suit you. Downloading of the latest IRS tax tables and forms relating to payroll taxes is usually available at this level, as is direct deposit of payroll into employee's bank accounts.

The advanced level of payroll tax software is for you when you have a large amount of employees, have a state income tax, and have multiple payroll concerns. Large amounts of deductions such as court-ordered garnishments (such as judgments), commissions, tips, vacation and sick day tracking, employee reimbursements, multi-state employees, and worker's compensation will do well with the advanced payroll tax software. Electronic filing is available, as are automatic tax updates. Many advanced level payroll tax software packages also include tax-planning features.

Whatever type of payroll tax software you choose, there are certain features you need:

  • It is user friendly. This means that it is easy to navigate (move around) in. Even someone without any payroll tax experience can use the software easily.
  • It provides you with the payroll reports you need. Payroll reports include: 941, 940, state income taxes, and unemployment taxes (FUTA is the federal one).
  • It allows you to print W-2s.
  • It automatically calculates paycheck amounts and deductions.
  • It integrates with your accounting software. This means that when you enter payroll information, your general ledger accounts are also updated. This saves you time from not having to enter information twice.
  • It is easy to update employee records. You can easily change withholding amounts and addresses, for instance.
  • You can prepare your payroll easily. A good payroll tax software program will allow you to input data into specific fields, input your payroll period, and easily print out your paychecks.
  • Customer service is available when needed.
  • It provides tax updates as needed.
  • They provide a money back guarantee
Some of the more popular payroll tax software programs include: TaxCut Home & Business, Peachtree, QuickBooks, and Proseries.



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