Managing payroll can be challenging for any business out there. Whether you’re an aspiring entrepreneur or a seasoned company owner, good payroll practices are essential to keep the business running and employees happy.
Now, if you choose to have your payroll processed in-house, there are certain aspects any sensible owner must consider for smooth operations. In that spirit, here are some expert-approved payroll tips to structure your business, guarantee timely and accurate employee payment, and comply with the law.
Choose a Remuneration Scheme and Schedule
For starters, business owners must choose whether to pay their staff an hourly wage or a fixed salary.
While a salary is generally more manageable, it may not make sense for the type of work involved. So, it’s best to choose a scheme based on the standards of the industry. Also, decide on the frequency of payment; while some companies pay their employees every 30th of the month, others will choose to do so every two weeks.
Establish a Budget
Next, it’s imperative to have a precise idea of how much you’ll spend on labor and related costs every month. Not only are business owners required to pay wages, but taxes as well, notably social security, Medicare, and unemployment benefits. For this reason, planning ahead for these expenses will prevent unforeseen costs and help keep the business healthy financially.
Invest in a Payroll Software
While there are many spreadsheet tools you can use to manage your payroll services and schedule in-house, nothing beats the convenience of dedicated software. The experts from Zenefits advise small and medium-sized companies to form a reliable payroll software provider to automate the payment process and streamline their operations. This will help save time and money, enabling businesses to run more efficiently. Some research will get you acquainted with dozens of options, so be sure to select one that fits your needs.
Circling back to the business’ payment structure, another tip is for employers to classify their workers. Whether someone is a full-time worker, an intern, or an independent contractor, irrespective of the salary, different designations call for different tax implications. With more and more companies recruiting freelancers and remote workers, it’s best to be aware of your legal obligations as an employer. Make sure to consult the IRS who will have more information about this.
Keep Compliance With Laws
Speaking of which, many business owners remain unaware of important state and federal laws regarding labor and payroll, one of the biggest culprits for financial mismanagement within companies of all sectors. As such, it’s important to establish a system that will allow you to comply with all the regulations in effect and keep yourself updated as to whatever changes may end up affecting your business.
Dedicate a Bank Account to Payroll
When it comes to the actual payment, seasoned professionals will advise any business owner to open a bank account dedicated to payroll. This will help categorize spending, improve cash flow transparency, and boost efficiency. It will also make expense identification easier to ensure that the venture stays liquid. Generally speaking, this is a necessity that becomes more pressing when the business expands and takes on more operations.
Keep Everything Under Check
When it comes to managing a business, proper organization is the name of the game. So, it falls upon every business owner to keep track of everything they spend, review data entry, keep records, and document all payroll transactions. Moreover, make it a point to track labor and tax forms, deposits, benefits, and staff vacation times. Besides, a number of state and federal laws make it mandatory for employers to keep records for a given period.
Be Open and Transparent
Lastly, but most importantly, openness and transparency are the foundation of any well-functioning business. Establishing a clear payroll policy and honest communication regarding workers’ pay is essential to maintain your staff satisfied, engaged, and motivated.
If your business is going through a temporary rough patch and you’re unable to deliver wages on time, always be sure to communicate with your employees, explain the situation, and ensure that you’re working hard towards fulfilling your payment duties.
All things considered, payroll management is certainly not an easy task. Owners need to make sure they’re perfectly organized, have clear policies in place, are in compliance with the law, and that they promote a good and transparent work culture. Streamlined operations will always translate into better performance down the line. So, with these tips in mind, you’ll be able to make payroll management an effortless routine.