What are some payroll tips?
Staying on top of payroll can be a time-consuming and stressful process. Especially if you take care of your payroll in-house, it can quickly become a nightmare for business owners.
According to the National Business Association 2013 Small Business Taxation Survey, 60 percent of small businesses handle their payroll processes internally. Regardless of the size of your business, it’s important to have an organized payroll system in place to protect you from IRS penalties and to ensure your employees are paid on time.
Here are 10 tips and tricks to take the hassle out of managing payroll:
1. Determine whether your employees should be salaried or paid hourly.
For most employers, putting employees on salaries is easier to manage. Salaries take the stress out of determining how much your employees are paid each month and keep everything consistent.
However, if you have hourly employees, make sure you have a system in place for how you keep track of time and compensation.
2. Decide how often you’ll pay your employees.
Every employer needs to decide on a pay period for their employees. Pay periods can be weekly, bi-weekly, or monthly. This will help you stay organized and make payroll run more smoothly.
3. Classify your workers.
Another important payroll tip to follow is properly classified your workers. Whether you hire full-time employees, independent contractors, or interns, if the person is performing work for your company, they typically should be classified as an employee.
For more information on worker classification, refer to the Employer’s Tax Guide.
4. Pick the best software for the needs of your business.
When choosing payroll software for your company, try to select an option that’s hosted on the cloud. This will make it easier to access all of your payroll information in one place, whenever you need it.
In addition to finding payroll software, invest in a management program that takes the stress out of payroll for you. For example, here at Namely, we enable employers to integrate their payroll software into our system, which boosts collaboration and improves communication during the payroll process.
5. Simplify your process to save time and money.
According to the National Business Association survey, 27 percent of small business owners report spending three to five hours per month on the payroll; one-third of employers are spending more than $500 month on their services.
To simplify your payroll process, invest in an HR task manager. These types of tools enable employers to keep everything in one spot, which saves time and money in the long run.
6. Keep track of everything.
Another great way to simplify your payroll system is to keep your records and documents all in one place. In fact, there are some federal and state laws requiring employers to hold onto some records for a certain period of time. For example, it’s a good idea to keep track of W-4 and W-2 forms, tax forms, benefits, vacation time, and tax deposits.
7. Automate state and federal taxes.
Find out if your payroll software automatically takes care of state and federal taxes for you. This can prevent you from forgetting about payroll tax deposits and ensure the process is completed in a timely matter.
8. Factor in raises and benefits.
Want to make it easier to give your employees raises? Why not give them additional benefits as a type of reward?
You could give your employees a stipend for childcare, a new laptop, or additional insurance. These are just a few of the tax-free options you can give your employees, which will simplify tax paperwork on your end.
9. Find out if you need employer ID numbers.
In order to process taxes, some states require employers to obtain employer ID numbers. Most businesses and entities already have ID numbers; however, if you don’t have one, you must contact the IRS to apply for one.
10. Create a budget.
When planning your payroll, be sure to budget for wages and taxes. Employers are required to pay Social Security and Medicare taxes, and most are required to pay unemployment taxes, so make sure you plan ahead for these expenses.
Managing payroll requires patience, organization, and communication across your entireorganization. By following these tips, you’ll be able to streamline your payroll process and become more efficient.