Here are 5 tips to help you better the payroll for your small business.
- Develop and Maintain Policies and Procedures
One of the most common mistakes a small business makes during its first months of operation is that they start processing payroll without policies and procedures firmly in place. Payroll is one of those things that cannot be left to chance. Why? Because it is heavy regulated by the Federal, State, and Local Government Agencies. Therefore, it is vital for business owners and HR departments to develop policies and procedures that the company will follow at every turn. For example, have a policy that relates to what steps are going to be taken when an employee is caught continuously on their cell phone and using Facebook for personal reasons. It is equally important to update these policies and procedures as the company grows. Growth brings change, and change has to be reflected in how payroll is processed.
- Complete Onboarding Quickly
An onboarding procedure is essential to helping your small business be as efficient and quick about getting the vital employee information into the system. It can really mess up your monthly and quarterly reports as well as the employees W-2 if you missed entering a paycheck into the payroll system. Plus, if the employee only worked for you a short time, you’ll probably end up paying the “employee’s taxes” when you do enter in their payroll. Not to mention once the employee leaves, it’s extremely difficult to get back this money you paid out for the “employee taxes” that you put into your payroll system after the employee has left your place of business. So, set it up to immediately have the employee fill out their employee set up sheet and their W-4 so that you can give it to your payroll person to be entered into your payroll account.
- Be Clear On Worker Classification
Classifying workers as employees hourly and salary are important when you are processing the payroll. It ensures each employee gets their fair share that your small business promised them. It is also equally important to classify your subcontractors as a subcontractor. If you can tell person doing the work- when, where, how-to-do the job and provide the tools and supplies necessary, then they are your employee. Misclassifying employees and subcontractors can result in heavy fines on a Federal level and possibly your State and local government. Eeek! You’d better practice good management to prevent being fined more than once for a simple mistake. Construction and Hospitality are two sectors that heavily use both kinds of workers. The IRS and other government agencies are looking for employers who are misclassifying their employees. For example, the State of Colorado can fine you $5,000 for your first misclassified employee. A subsequent fine can be up to $25,000 for the second misclassified employee.
- Automate Time and Attendance
The vast majority of payroll errors usually are caused by human error. Although we all try our best to be error free, there are times when we all fall short. One of the best ways to prevent this from occurring is to utilize automation. There are electronic time clocks, employee ID cards, which can save you time and money by ensuring accurate time being logged into your payroll account. We really like T-Sheets for working with Quickbooks Online. It’s simple, fast, and accurate.
Payroll processing and benefits administration are complex enough on their own. Employers do not need to make things harder on themselves by failing to implement a few simple solutions that would make payroll more efficient. These five tips listed here can be the starting point for improving your small business’ payroll. Follow up by Contacting us to learn more about our industry-leading solutions.
6 thoughts on “5 Tips for Better Payroll”
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