Users of traditional payroll service providers (ADP and Paychex being two of the better-known examples) often literally don’t realize how much the service is costing them.

It’s common for these providers to charge on an a’ la carte basis for their services.  Which means that the only charge you’re likely to be really aware of is that big one, for the periodic payroll run.  So when you actually add up your charges for the year, you’re often taken aback to find separate, itemized charges for things such as...

• quarterly reporting
• check and report delivery
• check signing
• W-2s
• direct deposit
• extra pay runs
• support phone calls (that’s right: your vendor may charge you for the time it spends fixing even problems that it created!)
  ...even though many of those items are as much a part of “payroll” as the regular run itself.

Then there are a host of less tangible – but still very real – costs, such as:

• cost of resolving an error on an employee's paycheck caused by the payroll service provider (plus the likely cost of that same error occurring again, before the first one got fixed)
• cost in employee goodwill/loyalty of a late delivery, requiring employees to wait for their checks
• cost of time spent when employees question you about an old check, W-2 or vacation balance because they can't find the information for themselves
• time spent calling and calling your service provider to get problems resolved

This is the appeal of an Internet-based, “Software-as-a-Service” payroll service provider.  In some cases, you pay a single flat rate for access to all functions of the application, so your costs are level and very predictable.  In addition...

• the employee/hours/rate data used for payroll runs is totally under your control, not batched in and subject to key-entry errors;
• employees can access (authorized portions of) the same data, so they’ll rarely need your time to answer questions about old checks, W-2s or vacation time;
• you can print checks locally (if you wish), so there’s no such thing as a check/report delivery charge (never mind a late delivery);  and
• you can preview payroll prior to the regular run, greatly reducing the incidence of re-runs.  

We’ve looked at only the cost differences in this post;  in an earlier one, we outlined additional benefits of going with an online payroll service provider.  Hopefully, you’ll look carefully at all the dimensions before going with the provider type that’s best for you.  To make it even easier, we’ve also included a side-by-side comparison charts on our website.

In a down economy like the present one, everyone does a little belt-tightening.  Unable to grow revenue easily (if at all), most businesses seek to maintain profitability as long as possible by shaving costs wherever possible.

In that spirit, here are 7 simple things that small businesses can do to save money...

• Switch your phone service to Voice over IP.  After a few dicey years when VOIP was a challenge even for bleeding-edge pioneers, it’s now well tested and works largely as promised.  And it’s far cheaper than wireless or traditional landline.
• Utilize open source software to eliminate license-purchase payments and ongoing update fees to traditional software vendors.  Open Office (from OpenOffice.org) and Google Docs are good examples that both provide word processing, spreadsheets and presentation software.  They maybe don’t have all the bells and whistles of Microsoft Office, but more often than not they do what you need them to do ...and they’re free.
• Use Software as a Service (SaaS) wherever possible.  SaaS is advantageous because you can get the productivity of top-level software, better than what you could probably afford to buy flat-out.  The SaaS model provides access to traditional software over the Internet for a monthly fee.  Popular examples are Salesforce.com and Netsuite.  Clients do need servers, up-front licensing and system knowledge.  But the vendor maintains the software and performs all the system maintenance, reducing your need for costly in-house IT support.
• Switch to a free email service from AOL or other traditional provider.  There are enough free choices around these days (Yahoo! Mail, Gmail from Google, etc.) that it’s essentially become a commodity.  If you have a website, of course, your developer can easily set you up with email capability on your own www.mybusiness.com domain;  that may not make it quite free, but at least it will be painlessly bundled with other substantial value ...and probably still less than the subscription services.
• Consider bartering some of your products or services for those of similar value that your business requires.  Of course, this gimmick doesn’t save real economic value (your people are tied up producing the good that’s being bartered), but it does husband cash.  And if it happens to come at a time when some of those people are less than fully loaded with client work, it may save them from unpaid “holidays” or even a layoff. 
• Seek out blanket discounts on everything possible.  Your Chamber of Commerce is an excellent information source for member-to-member discounts on insurance, workers' compensation and similar deals offered by other members.  Your business category or ownership makeup may make you eligible for still more discounts or subsidies that are essentially “hiding in plain sight” ...but you will need to flush them out.

And last, but perhaps most substantial...

• Switch to an payroll service provider.  We spilled a bit of ink on this subject in our recent post, “Top nine reasons to go with an online payroll service”, so we’ll mention only those that directly impact cost here...
  • You will typically pay less than you would for either a traditional batch-oriented service or for acquiring commercial application software.  (Compared to the latter, it could save you the cost of an in-house IT department!)
  • You should have the option of printing checks locally (generally not available with a traditional service), thus saving on shipping expense.
  • Because the system is truly online, you should be able to preview your entire payroll before actually running it;  this can eliminate re-runs, which most traditional service vendors charge for.

By implementing these hints, your business may not only weather this recession intact;  you may be able to continue funding marketing and product development to a level that will enable you to leapfrog your competitors, once we all come out on the other side.

All employees will discover and learn aspects about their jobs and about your company that may become a particularly sensitive issue when an employee leaves the company.  While depending on state laws, employers can add a certain amount of protection through the use of properly written non-compete agreements.

It is generally understood that a former employee may eventually be in a new job position that could be in competition with the former employer.  For example, an electrician may not necessarily prevent a former apprentice from opening up his or her own business in the same neighborhood. However, an employer may restrict the former employee from entering into a certain scope of competition through a covenant not to compete.  Since specific restrictions and steps can apply, such agreements and covenants should be reviewed by an attorney.

In determining whether or not entering a non-compete arrangement makes sense for your business, the agreement should:

• Be crucial to protect the interests and survival of the business.
• Not limit the employee in a manner that goes beyond what is reasonable to protect your business interests. (Example: If your CPA firm focuses on clients in Arizona, then restricting the former employee from practicing in Florida would be deemed unreasonable.)
• Not subject the public with a loss of access to the former’s employee’s service or skill.
• Be a legitimate binding contract such that the former employee receives something in return by signing such an agreement (i.e. monetary compensation).

How do you make sure your workplace is free of harassment? Getting socked with an employee sexual harassment claim is not only bad for your business, it could also be bad for you! 

Depending on state law, managers and supervisors may have individual liability when it comes to sexual harassment claims made by an employee. Here are a few examples of suit actions on which you can be named along with your company:

• Not taking quick and appropriate action for harassment situations that were known or should have been known;
• Aiding, abetting, or engaging in sexual harassment; or
• Retaliating against an employee for making a complaint

To help ensure a workplace environment that is free of harassment, consider applying and establishing the tips set forth in the HRAdvisor newsletter this month. I've posted some of the tips here for your reading pleasure. 

• Establish a written Employee Handbook policy specifically addressing a hostile work environment.
• Update the company's electronic assets usage (i.e. Internet, texting) policies specifically addressing sexual harassment issues.
• Train Management and employees on what sexual harassment is and how to avoid it.
• Investigate each complaint and report immediately.
• Document all information gathered in the investigation of a complaint.
• Don't overreact and stick to the facts. Managers and supervisors who do overreact and jump to unfounded conclusions toward an accused employee are held accountable as likely as those who do nothing.
• Communicate with involved parties while emphasizing protection of confidentiality and privacy as appropriately as possible.
• Keep aware whether following-up on specific cases or monitoring the workplace in general.