If your company is starting or growing and adding new employees, it is important that payroll is accurate and consistent to avoid long faces on the day’s pay stubs being given.
Here are some tips for cutting costs, improving productivity, and keeping the process going.
- Keep complete payroll records.
- Work with an accountant to establish a payroll system.
- Know the expiration dates.
- Know the functions of your payroll system.
- Open a separate payroll account at your bank.
- Update your payroll system as your company grows.
- Know the rules and follow them.
- Know what you don’t know.
- The key to success
Keep complete payroll records.
Start with basic information for all employees, including social security numbers, the number of deductions, benefits, overtime, bonuses, and other factors that impact their paychecks. Create a single file in MS Excel or payroll software system and keep it up to date. Remind your employees regularly to inform you of impending changes in their circumstances before those changes occur.
Work with an accountant to establish a payroll system.
Certified public accountants, banks, and other number specialists can advise you on managing your payroll. If you have an accountant, take some time to work on a system that simplifies your payroll process with software like QuickBooks. Your commercial bank is also a great source for quick advice to prevent payroll problems from ruining your day. You better spend your time growing your business.
Know the expiration dates.
It is important to consult with an accountant or tax advisor about the due dates applicable to your specific business taxes. For example, most business taxes are due on March 15 of each year. Forms W2 and 1099 must be in the hands of employees and subcontractors by January 31. Your business is a company of any time, a C company, an S, an LLC, or some other corporate entity; ask your state tax agency to give you a list of the forms and due dates, including the quarterly payments for unemployment income taxes.
Know the functions of your payroll system.
There’s a lot more to counting the hours your employees work when it comes to preparing payroll. Payroll service can help you control health insurance contributions, 401K plans, wage garnishments, and other factors. Find a system that expands to guide you through the maze of who’s in charge of what, and take the time to learn how to use it. Most payroll software is developed for the inexperienced. Provides guidelines, alerts, warnings, and other alarms to let you know when things are inconsistent. Recheck your numbers to avoid problems, both for employees and for the company.
Open a separate payroll account at your bank.
Talk to your bank about opening a separate account for payroll deposits rather than distributing them from your operating cash. Include taxes, benefit costs, social security, Medicare, and other payroll deductions in this separate account. This is another way your bank can become your invaluable partner. Your representative can give you facts, numbers, rules, and regulations to have your company’s cash on hand to pay your staff and taxes on time.
Update your payroll system as your company grows.
When your company has a couple of partners and a couple of employees, payroll is pretty simple. But most businesses plan to grow, expand their operations, and add more employees. The system you start with will most likely not provide the functionality you need as your business grows. At some point, it will be wise to hire outside services for payroll functions, to eliminate the need for employees to write checks, make timely deposits for tax bills, and pay health insurance premiums. But first, talk to your banker about establishing a unified system that incorporates all of your business accounts and activities into one simplified system. You will still have to take care of the records,
Know the rules and follow them.
Consider tax agencies as partners in your business. The IRS and state and local tax agencies are more than happy to provide information on their request. Contact these agencies for the rules. They will help you understand the rules and regulations and offer workshops for small business owners. Attend a workshop or two, take notes, ask questions, and get a number to call if more questions arise.
Know what you don’t know.
Unless you are a certified public accountant, you most likely don’t know what you don’t know yourself. Hire a certified public accountant, accountant, or payroll professional to order the books and your system. Have a consultant clean the books and create a system that you can understand. It is worth investing a little money to take advantage of the knowledge and experience of a true professional. Also, have your phone number on speed dial so you can get answers quickly.
The key to success
Managing a payroll includes many moving parts: employees, tax agencies, investment managers, your bank. Although that sometimes makes things a bit confusing, it also means that you have many resources available to help you.
The most important thing is not to be late. The costs of late payments in business are very high:
There is nothing worse for morale than a paycheck being rejected.
- Failure to make a payment to creditors damages your reputation and causes you to pay late fees.
- The IRS is not very friendly about deadlines that are not met.