Payroll is every worker’s favorite word, but can be the thorn in the side of small and mid-sized business owners. Payroll isn’t as simple as cutting employees a check and calling it a day. You need to document the hours worked, check those records for honesty, handle taxes and make sure that you’re not omitting anything along the way. Small companies are especially vulnerable to mistakes in payroll, typically because the owner is doing it on top of all the other duties he or she is in charge of. Healthcare, for instance, can be a big problem. ADP.com reports that 68% of companies don’t have a plan for controlling costs of healthcare, which are tied to the paycheck itself.
Fortunately, payroll is repetitious. It’s something you can distill into a series of steps to try and make your tasks more manageable, which means you can look for ways to hack the process. Here are some tips to help make your payroll process a more efficient part of your business:
One of the best things you can do to keep yourself organized is to cut down on the amount of paper floating around your office. Some of those documents are inevitable, especially as new hires come into the company, but e-invoices are just one example of how you can cut down on paperwork. These invoices are completely digital, and the contractor can even receive payment from a digital source. The end result is less paper, a faster payment process, and automated recording of the entire transaction.
Set a Pay Cycle
The pay cycle is more than just an exciting day for employees. Most employers will choose to pay employees every two weeks, but it’s not unheard of to wait for monthly pay periods or to pay employees weekly. Whatever your decision, make sure you keep it consistent. Not only does it do wonders for your reputation as an employer, there are legal ramifications (based on state) for employers who fail to deliver paychecks on time.
Document Hours Worked
The most difficult aspect of a small business is keeping track of hours worked. Employees forget time cards, sometimes they work from home and sometimes they forget to punch in or out. This results in a lot of time spent tracking hours, and then reviewing those results for accuracy. It’s best if you can set up some sort of cloud-based system, which would record employee hours and provide HR or accounting with a simple spreadsheet. The less time you need to spend verifying, the easier it is to check your numbers and move on to other tasks.
Pay Your Taxes
Small businesses are especially susceptible to missing taxes, because they typically lack the quality control to make sure things get done on time. They are too busy doing their jobs to worry about quarterly taxes, but face penalties every time they fail to do so. Paying your taxes can be automated just the same as tracking hours, but you will need to invest in a platform to make it possible. Your other option is to hold this money manually in your own accounts, which can prove dangerous if you forget even one date. Therefore, familiarize yourself with your state and federal tax dates for the quarter, and make sure accounting is aware of them well before the time comes.
Running efficient payroll doesn’t just save time for you to handle other tasks, it saves your business money paying out penalties. Payroll is also tied to your state’s labor laws, so there are serious legal ramifications for companies that fail to heed these warnings. It’s typical to start with a manual payroll system, but the sheer number of employees your business may gain over time leads to automated solutions.