Payroll management can be stressful and time-consuming. It can quickly become a headache for business owners, especially if your payroll is handled in-house.
The National Business Association 2013 Small Business Taxation Survey found that 60% of small businesses manage their payroll internally. No matter how big or small your business is, having a well-organized payroll system will help you avoid IRS penalties and ensure that your employees get paid on time.
These 10 tips and tricks will take the stress of managing your payroll.
Decide whether salaried employees should be paid hourly or salaried.
Employers find it easier to pay employees salaries. Salaries remove the stress from determining how much each employee is paid each month. They also keep everything consistent.
If you have hourly workers, ensure that you have a system for tracking time and compensation.
How often will you pay your employees?
Each employer must decide on a pay period to pay their employees. Pay periods can be bi-weekly or monthly. This will allow you to stay organized and ensure that payroll runs smoothly.
Classify your workers.
A good tip for payroll is to properly classify your employees. You should classify your employees as employees regardless of whether you are hiring full-time employees, contractors or interns.
Refer to the Employer’s Tax Guide for more information about worker classification.
Choose the right software for your business.
Choose a cloud-hosted payroll program when looking for software to manage your payroll. This will allow you to easily access all your payroll information from one location, at any time.
You should also invest in payroll management software to take the stress out of managing payroll. Namely allows employers to integrate their payroll software in our system. This increases collaboration and improves communication throughout the payroll process.
Reduce time and save money by simplifying your process
According to the National Business Association survey 27 percent of small-business owners spend three to five hours a month on payroll. One third of employers spend more than $500 a month on payroll.
A HR task manager will simplify your payroll process. Employers can save time and money by using these tools to manage their payroll.
Keep track of everything.
A great way to simplify your payroll is to have all your records and documents in one place. There are federal and state laws that require employers to keep certain records for a specific period. It’s a good idea, for example, to keep track W-4 and W-2 forms as well as tax forms, benefits, vacation times, and tax deposits.
Automate federal and state taxes
Check to see if your payroll software handles federal and state taxes automatically. This will prevent you from forgetting to deposit payroll taxes and ensure the process is completed on time.
Factor in benefits and raises.
You want to make it easier for your employees to get raises? You can reward your employees with additional benefits.
Your employees could be given a stipend to help with childcare, purchase a new computer, or insurance. These are just some tax-free options you could offer your employees. This will make it easier for you to file taxes.
Find out if your employer ID number is required.
Some states require that employers obtain an employer ID number to process taxes. Many businesses and entities have ID numbers. However, the IRS requires that you apply for one.
Make a budget.
Plan your payroll to include wages and taxes. Employers must pay Social Security and Medicare taxes. Most employers are also required to pay unemployment taxes. Make sure to plan for these expenses.
Payroll management requires organization, patience, and communication throughout the organization. These tips will help you streamline your payroll process, and make it more efficient.
