When you run your own company, you must pay your workers. That’s a simple fact of life.
However, how well do you understand the fundamentals of payroll? Have you reviewed the tax withholdings, deductions, and regulations that govern payroll?
Whether you’re a tiny business owner on the verge of hiring your first employee or a well-established company with long-term employees, you need to be sure you’re handling payroll properly.
If you’ve been looking for ways to improve your payroll and paychecks process, then you’ve come to the right place.
Keep on reading for our full breakdown of the main eight ways you can streamline the process and have payroll services to be proud of.
1. Integrate and Centralize With Other Systems
When you connect your payroll system with your other company operations platforms, life becomes a lot simpler. Payroll may be linked to accounting systems, HR applications, and time-keeping software.
Connecting your payroll to your accounting software, for example. Your records will be immediately updated with the money you spend for an employee’s efforts when they perform a shift.
It’s the same with time-keeping software. Employees can see how many hours they’ve worked in real-time and know how much they’ll be paid on their next payment.
2. Establish a Payroll Schedule
When was the last time you paid your employees? Do you send checks once a month, twice a week, or once a week?
Each method has advantages and disadvantages. Having a monthly payroll plan, for example, can cut down on the amount of time you spend on these tedious tasks. You just have to worry about doing it once instead of 2-4 times each month.
Your workers, on the other hand, may want to be paid more often rather than once a month.
Employees who are paid weekly or biweekly may better manage their own money. With less time between paychecks, paying bills, and keeping on top of financial responsibilities becomes simpler.
3. Withhold the Right Amounts Before Payment
Employees choose how much should be taken from their paychecks by filling out W-4 forms. Insurance premiums, charity deductions, and retirement contributions may all be withheld freely by employees.
However, according to the employee’s W-4, there are usually federal and state tax obligations for what has to be withheld during payroll processing.
If the business deducts costs for uniforms, tools, lunches, or payroll advances, be sure the employees have signed a permission form.
Legal court orders, such as child support or student loans, may force additional money to be deducted from a salary. Withholding compensation as a form of retaliation or punishment for an employee, on the other hand, is illegal.
4. Obtain Appropriate Payroll Processing Training
Payroll processing may be difficult. Payroll processing involves a range of ever-changing tax deduction regulations for federal, state, and municipal governments. This is particularly problematic if the business employs people in several states.
Regularly, withheld tax deposits from salary checks must be paid to government authorities. Remember that company owners may be held personally responsible for how this money is used, and they can’t be used for anything other than business costs.
5. Save Money by Avoiding Needless Expenses
Time is money in business. You only have so much time in the day, and the last thing you want to do is spend it on the payroll. Outsourcing may be the best option for you if you’re spending a lot of time on these chores.
However, you should be aware of the significant expenses associated with some payroll solutions. Compounding costs may rapidly mount up, suffocating your monthly earnings. Some of the services that are outsourced are well worth the money. Others may be expensive, with monthly fees of up to $200.
6. Establish a Formal Payroll Policy
Having a formal payroll policy in place will ensure that everyone is on the same page. Put everything down on paper. If there are any issues or disagreements about payroll, you and your new workers will have a document to refer to.
Employee pay rates, when they’ll be paid, and whether or not they’ll be paid for holidays and sick days are all highlighted in this form, which should be signed by new employees when they first start. Keep this paper safe in case there are any concerns since it clearly lays out all payroll information.
7. Use a Separate Bank for Payroll
Keeping your company’s finances organized may be made easier with a separate bank account for payroll. It will provide you with a clear view of your company’s cash flow, particularly if you’re just starting out.
When you’re attempting to figure out how much you’ll need to pay for payroll taxes, social security, benefits, or Medicare, a separate bank account will come in handy.
8. Automate Your Payroll System
By automating your payroll, you significantly decrease the odds of making a mistake anywhere along the route. You’ll be more likely to continue delivering error-free pay stubs if you use less manual entry.
That’s the point when you’ll want to shop around for the best online payroll software for your business.
As a result, your workers will be even happy if they have never had to worry about running the numbers to make sure they’re paid correctly.
They just wait for the next pay month to arrive, then collect through direct deposit—as it should be. If you continue to make errors, you may face fines and penalties from governmental bodies.
Employee Paychecks: Simplified
If you’ve been running your own business for a short period of time, things can be quite overwhelming, and you probably weren’t able to dedicate enough time and focus to your payroll system.
Hopefully, our guide has shed some light on the key eight ways you can simplify your payroll infrastructure. And, if you’ve liked our article, then you’ll love checking out the rest of our tips and tricks. All of those (and more) are available to you in our business section.