Business owners know that their job is one of responsibility: ensuring that work is done right and correctly the first time. But payroll is an area of business operation mired with nuances and minutia and fraught with the potential for making mistakes and getting lost in the weeds. Not to mention just how time-consuming it really is.
From processing paychecks, bonuses, and deductions to keeping track of all the documentation, to staying up on labor laws and compliance — payroll management involves quite a few moving parts, to put it mildly.
Many business owners look for ways to manage payroll more effectively. And even though payroll happens back-of-house, it is a core part of operations, that if handled inefficiently, can have enormous monetary consequences.
Further, in the throes of this current global pandemic, more employees now work remotely than ever before, exponentially increasing HR issues for employers and sometimes overwhelming payroll completely.
But if you’re running your own business and managing payroll, here are eight tips for establishing the ultimate payroll efficiency:
1. Get Organized
When it comes to anything dependent on numbers, organization is key. The more organized your payroll management, the easier your life will be.
Integral here is creating a payroll calendar to track key dates, including when important forms or payroll taxes are due. And don’t just list the final deadline, list out internal deadlines leading up to the due date so that all the sub-tasks necessary can get accomplished.
2. Get the Most Out of Technology
There’s lots of software that exists to make payroll more manageable. Today, software is available to handle time-tracking, forms, employee time off, and much more.
If you outsource to a payroll management company, they will use the most up-to-date software, so that your business doesn’t have to keep track of software updates.
3. Keep Current with Federal and State Payroll Rules
Payroll can easily spin out of control if you are not up-to-the-moment in your grasp of wage and hour laws, tax regulations, filing deadlines, forms, state law differences, and other regulations. Missed deadlines, penalties, and other missteps throw a kink into payroll operations and can become an enormous headache for a business owner.
If you do not have someone on staff who has the knowledge base and ability to stay educated and informed, it would be a good idea to outsource payroll to experts.
4. Continuity of Staff
An issue for many businesses, but especially smaller ones, is that each organization’s payroll leader has his or her own way of processing and documenting payroll. If you hire someone to replace or to assist that person, even if the new hire has payroll experience, they may experience a learning curve mastering the peculiarities of your system.
Ways to keep things consistent include standardizing processes and promoting internally. If that’s not possible, another option is to outsource to a payroll management firm, which is likely to maintain very standardized practices.
5. Be Transparent
Employee frustrations with payroll can harm morale. Be it a paycheck that sends home less money than expected, a misclassification of an employee’s role, or any other of a myriad of issues, misunderstandings cause problems.
Institute a payroll policy that lays out employee classifications, how salaries are determined, how the payroll process works, how payroll mistakes are corrected, and other matters that employees should understand. Include the information in your employee manual or handbook, so it’s standard across the organization.
Creating a secure online portal where employees can access information about their paychecks, withholdings, benefits, and more goes a long way to reassure employees about their pay. It can also be a good way to have FAQs answered so employees can help themselves to the information when it’s convenient for them.
6. Turn to the Experts
Besides being current in the legalities of payroll, which can change frequently, a payroll management company can improve efficiency in other significant ways.
Outsourcing to such a firm can take timekeeping, human resources, and payroll off the operator’s plate, as well as give the business quick and easy access to reporting, which can aid in the goal of transparency. These companies also can handle hosting online portals for employees.
A good provider may offer supplemental services, such as background checks, labor posters, and pay-as-you-go worker’s compensation, to further ease the compliance burden on business owners.
7. Timely Onboarding
There is a lot more to payroll management than getting the checks out and paying payroll taxes. It is important for both employer and employee to get started on the right foot, and that means completion of all necessary employment forms. Not only are many such forms required legally, but they also enable payroll managers to classify and compensate employees correctly.
Make sure to get it all done by any applicable deadlines. This can include documentation such as a W-4 for employees or W-9 for independent contractors, an I-9, federal and state withholding forms, direct deposit forms, and more.
Besides the potential for backed-up workflow and mistakes, another important consideration in payroll efficiency is the cost of its management.
Costs of internal management also can include software updates, training, and the fines and penalties that can result from mistakes. Analyze efficiencies to make sure you have an accurate snapshot of what the true costs are and where savings may be realized.
When internal management handles payroll, the time-intensive work takes time away from every other aspect of operating the business — namely, revenue-producing pursuits. The time consumption escalates as the business grows and adds more employees, but even a business with just one employee may be better off outsourcing payroll.
Outsourcing to a company that specializes in HR solutions for small businesses can greatly simplify it all, enabling operators to come out from behind the computer and grow the business. To get more information, contact your local payroll office or feel free to reach out to Payroll Vault - Fort Collins/Loveland.
About Payroll Vault
Payroll Vault is a boutique-style full-service payroll company designed for small business. Founded by a career CPA who identified the benefits of separating payroll from traditional accounting to achieve more efficient results, Payroll Vault focuses on the needs of local small and mid-sized businesses to help them achieve their business growth objectives faster.