Did you know September 2-6, 2019 is National Payroll Week?! To celebrate, we’re sharing our Top 14 Payroll Tips for small businesses. How many of these do you already do?
1. Set a budget
For most businesses, payroll is their greatest expense. And this expense will only continue to increase as your business grows. Therefore, it’s important to budget carefully with payroll. (And stick to your budget!)
Employers must match both Medicare and Social Security withholdings from employees’ pay. However, you may also have to pay other state taxes or factor in variable expenses like commissions or benefits.
Crunch the numbers with your accountant or financial planner to get a better idea of your payroll costs. Then, work to minimize these expenses so you can increase your profit margin.
2. Put some thought into your frequency
When it comes to your payroll schedule, choose wisely! More often than not, this will depend mostly on the size of your business.
However, you should also consider the time commitment for the person processing your payroll; the more payrolls you run, the greater your risk of payroll errors; and the impact on your employees. Also, remember that the frequency you choose today doesn’t have to be your frequency forever! This can change as your business evolves.
Top Tip: If you are looking to decrease your payroll frequency but are concerned how it will affect your employees, consider adding our free Wages On Demand benefit for your employees, so they can access their wages for already-worked hours anytime!
3. Integrate with scheduling
No one wants to spend hours keying in payroll. It’s tedious, but also puts you at risk of data entry errors!
Keep payroll quick and accurate with integrated timekeeping that automatically feeds employee hours into payroll.
Top Tip: SDP’s automated timekeeping solutions not only integrate with payroll but also have unique schedule enforcement technology to keep you compliant and decrease overtime!
4. Know your payroll laws
As a business owner, it is critical to stay familiar with the IRS’s compliance standards. That means guaranteeing your workers are classified properly, that your business has an employer identification number (EIN), and knowing your labor laws, to name a few.
To help you with this, SDP provides all our clients with free access to our HR Support Center full of guides, checklists, and laws. Ask us how to unlock your access today!
5. Outline your payroll policy
Have a clear payroll policy and be sure to have all employees sign. This should include how and when employees will be paid, what their compensation is, and additional considerations such as sick days, expense reimbursement information, or commissions.
6. Classify employees properly
Especially over the past year, employee classification has been one of the most hotly contested issues in the world of payroll & HR. As such, be sure to take extra care when it comes to classifying your salaried vs. hourly employees, as well as independent contractors.
When in doubt? Skip the risk of tax penalties and reach out to us to schedule a meeting with our own in-house labor law attorney and Director of Compliance, Brett Strauss, Esq., who would be more than happy to help with any questions you may have!
7. Hire a reputable payroll service provider
Halfway through this list, you may be starting to get a little overwhelmed… And that’s the thing. You started your business to follow your dreams–not to become an expert in state and federal labor laws and tax filings!
Working with a reputable service provider like Southland Data Processing means you no longer have to worry about all of these details because you have an expert partner on your side to help keep you on track. If you’re not already an SDP client, let’s talk to see if working together could be the right fit for your business!
8. Consider going cloud-based
It’s 2019, so why bog down your payroll department with outdated software? If you haven’t already, consider upgrading to a cloud-based platform like SDP Connect so all of your employees, managers, and owners can view or enter payroll from any device, 24/7/365.
9. Double-check for accuracy… And then check again
When it comes to payroll and HR, your business is only as good as your data. However, keying in employee names, SSNs, addresses, birthdays, pay details, and start dates provides ample opportunity for data entry mistakes.
To avoid fines, tax notices, or a potential labor audit, be sure to check your data frequently. Always double check when you input data. Additionally, we recommend having employees review and confirm their demographic information on a quarterly basis to ensure everything remains up-to-date.
10. Plan for employee benefits
We’ve said it before and we’ll say it again: your people are the most valuable asset to your business. Because of this, it’s imperative to build an effective strategy to attract and keep great employees. One of the easiest ways to do this is by designing a benefits package with your employees in mind.
Whether you’re offering retirement plans, medical insurance, financial wellness perks, or other benefits – these should speak to your employees’ wants and needs. And enrolling should be simple!
11. Document your payroll process
We think documentation is important for any area of operations in your business. However, documenting your payroll processes is especially important.
To maintain employee confidence and trust, it is imperative to have continuity in how your business processes payroll. Have your payroll team document every detail from onboarding to termination. This will also make training much easier later on when you have to hire new payroll staff!
12. Have a separate bank account for payroll
One of the best things you can do for your small business’ finances is to create a separate bank account for payroll. Keeping these transactions separate gives you greater visibility over your cash flows. Armed with these insights, you will be better equipped to work more efficiently with your budget.
It also makes it easier to identify your payroll taxes, cost of benefits, Social Security, Medicare, and other deductions. Ultimately, staying on top of your expenses will help you keep your business liquid and your finances healthy.
13. Audit your processes
According to the National Business Association, 23% of small business owners report spending more than 6 hours per month on payroll. Further, one in three small business owners spends more than $500 each month on payroll services.
We strongly recommend regularly auditing your payroll processes to ensure your payroll solution is still the right fit for your business. Over time, you may find there is a more economical or efficient option out there for you. Contact us today to schedule a free, no-obligation payroll comparison to see if there’s an opportunity to further streamline your processes with SDP!
14. Keep good records
Last but not least, protect your business by keeping good records. Per the IRS, businesses are generally required to keep employment records for 4 years, and tax documents for 3 years.
The good news is, if you’re using SDP Connect, all of your key tax and payroll information is stored in our secure digital filing cabinet. If you ever have any questions, all you have to do is go back and check your records!