8 Payroll Tips For Small Businesses

Author : ameliazoe
Publish Date : 2021-07-28 09:17:45
8 Payroll Tips For Small Businesses

Payroll can be difficult to manage, even for the most well-run and efficient teams. It can be not easy, for example, to keep employees' identities private. Overpayments and underpayments are much more common and difficult to spot. Accuracy, standardization, and backup systems are all important requirements that can be overlooked. It could lead to a lengthy audit.

A survey by OnPay, a payroll service provider, found that payroll managers spend on average 18 hours per month paying their employees. So it is even though most payroll advice is targeted at larger companies. So if you are looking to improve your team's efficiency, this information may not be helpful.

These are eight ways to streamline your payroll process. First, keep your records tidy and organized so you can save time each month and during tax season.

 

1. Create and maintain a payroll schedule

If there is one thing you are willing to do to simplify and organize the payroll process, it should be this. Ensuring that employees are paid on time is a cornerstone of keeping your team happy and keeping payroll in control. It doesn't matter if you have a system.

The best thing about it all is how simple and easy it can be to find and maintain a payroll calendar. Anyone can download pre-made calendars from the National Finance Center. However, keep in mind that your pay schedules may not be the same as the ones you find online. Therefore, you might consider making your calendar to reflect your business's practices and keep track of the next payday.

 

2. Automated payroll-related taxes

It sounds like you could automate payroll taxes to reduce the administrative burden associated with payroll management. However, it is more important than that.

Missing tax payments can result in severe penalties. It is possible to make a mistake if you try to do it all manually. A fine of 2% will be assessed if taxes are not paid on time. After 16 days, that penalty doubles to 10%. Although mistakes like this may seem impossible, manually paying taxes prevents them from being too serious. You'll be less concerned about these payments if you send them off sooner.

Many top payroll software and providers offer automatic payment of taxes. However, you'll be dealing with the IRS, so make sure you read all the fine print. The IRS will not be pleased if your software package fails to work as expected or your payroll provider does not follow the rules. Therefore, you must ensure that the arrangements you make are valid, guaranteed, and can withstand an audit.

 

3. All workers should be classified

Based on the classification of your employees, your workers' pay schedules will differ significantly. As a result, the tax implications for your company will also vary. Although it may seem obvious, the line between an independent contractor or a full-time team member is often blurred, especially for small businesses with tight budgets.

There is no easy solution. First, you need to be thorough in classifying your employees. To help you determine whether a team member is an independent contractor or full-time, the IRS has a classification guide. However, it is important to include all classifications back in your payroll system. It will ensure that no important distinctions slip by.

 

4. Do data entry double duty

Large businesses can either have their payroll team or outsource it all. Unfortunately, this is not the case for smaller companies. You can choose the payroll process that works best for your business, but it is important to have another pair of eyes data entry. A single zero could cause you endless headaches down the road.

To ensure that nothing similar happens, enter, run, then crunch the numbers twice more. It will make it easier and more time-efficient. Then, include it in your monthly plan review meeting. It will allow you to have more eyes on your data and give it a thorough run-through.

 

5. You need to find the right software. But don't let it be a crutch

Payroll software is the most popular choice when you need to automate the payroll process. It is because software systems can be simple to use and cost-effective. In addition, this allows your business to focus on what is most important.

Overreliance on payroll software can lead to new problems. You may not understand the financial details of your payroll if you plug in the numbers and let the software do the rest. Data compilation for audits can be made more difficult by them. Use payroll software if it works for you. But don't let the software use you.

Payroll software is not something you should be skimping on if you decide to invest. You should budget for an ongoing line item to cover this expense. Ensure that you are well-versed in its capabilities and have double-checked that it is compatible with legacy systems.

You might be able to think outside the box at this time. Are there other areas that could benefit from a more advanced payroll software package? Is the container capable of handling billing, invoicing, and other financial functions? It is easy to get too focused on one issue and not see the bigger picture. But, it's possible to look at things from a different perspective.

 

6. Learn the law

It is a given. Payroll laws can be complicated and vary from one state to the next. However, your payroll system must be compliant with all applicable laws. The American Payroll Association's guide on state payroll laws will help you to do this. Don't be afraid to ask for help if you feel overwhelmed by all the rules. It's better to get it right away than to suffer from consequences later.

 

7. Appoint a payroll manager

The position of "Payroll manager" can be considered a full-time job at most companies. This position requires you to navigate the complex pay issues of large businesses. The responsibilities for lean teams are not nearly as demanding, but they are equally important.

Consider asking a team member with experience in payroll management, accounting, HR, or business finance to manage the payroll. When combined with a great software system, these duties are not likely to be a problem for them. Even if more than one person is needed to assist, one can oversee everything much more efficiently than trying to do it all.

 

8. All records should be kept

It's not a recommendation to keep payroll records. Instead, it's a legal requirement. Patriot Software reports that employers must keep records of employment taxes up to four years, payroll records up to three years, and wage determination records up to two years to ensure compliance with the IRS guidelines. The software can help you with some of these tasks, but it is best to keep your records and digital records.

 

Payroll should be addressed early

Although payroll can be a pain in the rear, it is possible to reduce the stress by following the right advice early. Small businesses already have plenty to do. Payroll must be kept simple, so they don't get added on.

Disclaimer. The opinions and views expressed in this article are the authors Andrew Napolitano.



Category : business

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