Paying your employees is one of the most crucial aspects of your business. Without this process, your employees aren’t going to stick around for very long, and this will eventually mean a shrinking of your business and loss of income. Since your work cannot exist without your employees, it is critical that you figure out how to make the payroll process as headache-free as possible. Both you, your employees, and your payroll team are going to be dealing with the process for as long as the company exists—it shouldn’t feel like pulling teeth; it should be a streamlined operation that you and your team are confident with. To help ease the procedure, the following will explore some expert tips for a smooth payroll experience.
Find A Payroll Software
You are going to need to keep stellar records for when tax season comes up. Organized and detailed records of your payroll can also help resolve any confusion between your staff and your payroll team. Find an easy-to-use payroll software that suits the workflow of your payroll team. Pay attention to extra features that apply to your business when selecting software. You likely want direct deposits, but maybe you also need a way for staff to report their tips; maybe you also work with contractors and so need to be able to work with their invoices. Perhaps you need to be able to work with a garnishment program for one or more of your employees or track hours worked or deduct industry-specific benefits. Find software that suits your needs all in one instead of using six different platforms to accomplish your payroll goals. This way, the process will be greatly sped up, and all the information you need will be stored in one place, and there’s far less risk of losing something important.
Detailed Records Of Profits And Losses
When it comes to tax season, nothing is more critical than keeping a continuously updated profits and losses record. This needs to be completely accurate (read as double-checked) and as up-to-date as possible (no less than one per month). This will drastically speed up the calculation and accounting of any taxes the business owes or will owe in the future. It can also give your business a boost as you might be able to use this data for a bird’s-eye-view of where expenses aren’t actually contributing to profits or growth and where there’s space to reduce spending.
You Need A Business Bank Account
No matter what the situation, you will need a second business bank account that is designated specifically for payroll. You don’t want to run the risk of the money designated for payroll and payroll taxes being mixed up with general business funds because otherwise, things can get messy quickly. You might end up accidentally spending this money that was supposed to be set aside for your employees or the government on something else and not have the money when someone asks you about it. Avoid all the trouble and keep a separate payroll account.
Understand Where Mistakes Can Happen
There are a few common areas within payroll where mistakes can be made. You should know that errors, if not caught immediately, can cause massive headaches later on when your employees or the IRS start asking questions. Avoid this trouble, but triple-checking the following common pitfalls in payroll:
- Pre-tax deductions (for example, health insurance).
- Lack of time tracking for part-time and hourly staff.
- Complying with child support.
- Miscalculating state and/or federal taxes.
- Overlooking penalties and back taxes.
- Lack of formal protocols for end-of-the-year filings.
- Losing track of previous wage and tax information.
- Unclear processes for managing any workers’ compensation payments or claims.
- Mistakes in documenting tax information.
- No process for organizing time off.
- Payroll checks that are left uncashed (they must be submitted to the state).
- Inadequate records of payroll for the IRS.
- Lack of system for managing team members who aren’t included informal company payroll.
- Not understanding the Fair Labor Standards Act.
- Errors in the classification of employees as independent contractors.
Mistakes happen; they’re a part of life, but when it comes to payroll catching these mistakes early on is crucial if you want a stress-free payroll process. The sooner an error is noticed, the less damage it tends to do.
The above information should help you iron out any kinks in your payroll process. Of course, every industry is different, and this means you might need some hyper-specialized advice. If this is the case, reach out to a professional payroll service provider or a payroll software provider and ask about your specific context.