If you’re having a 16-year-old kid mow your lawn, paying him is as simple as handing over some cash. If you’re a business owner paying your employees, however, things get a lot more complicated. In fact, if you overlook key regulations regarding payroll you could end up in hot water with the IRS, and nobody wants that to happen. That’s the worst-case scenario, though; most of the time, business owners just need some help streamlining the payroll process so it’s as efficient and error-free as possible.
There are all kinds of solutions to payroll woes, from upgrading your accounting software to hiring a service like Checkissuing to enhance the security and convenience of your company’s payroll. Let’s examine the details below.
#1: Get some professional help
Sometimes the first step to making payroll simpler is admitting that you don’t quite know what you’re doing. As a business owner you’re probably wearing a dozen different hats already, so you shouldn’t expect yourself to understand the complexities of payroll too.
You might hire a CPA to train you, or better yet, get one on board as a full-time or part-time employee. Having a dedicated accountant should free up a lot of time that could be spent more productively. Whatever you end up doing, make sure that whoever’s processing payroll is acquainted with the regulations concerning deductions, filing schedules, and so on. Since these things are required by law, they’re important to get right. Even if you’re fairly sure that you aren’t missing any of the puzzle pieces, it might be a good idea to consult with a CPA just for your own peace of mind.
#2: Use accounting software
Depending on how small your business is, you might feel comfortable processing payroll without the help of accounting software. A lot of businesses still do things that way, and it could work just fine for them. However, if you’re planning on expanding (or already are), this could seriously get in the way of scaling up your business.
There are several advantages of using accounting software like QuickBooks to facilitate payroll. For one thing, you’ll save a ton of time. For another, most of these platforms automatically take current regulations into account. This means that they’ll include the right calculations for tax deductions (if applicable), you’ll be able to add bonuses, etc. Plus, accounting software is designed for a lot more than just payroll; it could help you with anything accounting-related.
#3: Track attendance electronically
Assuming at least some of your employees get paid on an hourly basis, their paychecks will be calculated according to how many hours they worked during the payroll period. How do you get that number? Employees presumably record when they clock in and out, but all that information has to be added up somehow.
If you’re doing this task yourself, it may be time for a change. Not only is it time-consuming, but it’s just asking for mistakes to be made. This isn’t to say that you can’t do basic math; it’s just to say that you can’t do it perfectly month after month. Getting employees’ paychecks right is an important part of maintaining trust, so it only makes sense to reduce the chances of stray errors making their way into the paychecks.
Fortunately, there are all kinds of ways to track attendance that will be easy for both you and your employees. There are apps made for that purpose, or you could use a point-of-sale system that includes this function. Whatever you do, you should have access to a report at the end of each pay period that lists each employee’s total time worked.
What about things to avoid while processing payroll?
Doing things right can make payroll simpler, but so can avoiding mistakes. Here are the most common ones to look out for.
#1: Not following regulations
If you don’t have accounting experience, you might be shocked at just how many regulations are associated with payroll. Before an employee even gets paid, they have to fill out specific forms. Then you have to file those forms by a certain deadline. Independent contractors get different forms, which you have to send to them – also by a certain deadline. Then there are all the applicable tax deductions, child support deductions, and other details. It’s enough to make your head spin if you aren’t adequately trained, in fact. If you aren’t confident that you can keep track of all the moving parts, you should probably enlist some professional help. This will bring efficiency and accuracy to your payroll process, and keep your business on the straight and narrow where the IRS is concerned.
#2: Not being accurate
This might sound extreme, but you should have a 0% tolerance policy for errors in payroll. It might not be achievable every single time, but you should get as close to it as possible. Why is it worth that much trouble? Because most of your employees take their paychecks pretty seriously, and you should too. If the people who work for you think that you don’t care about compensating them correctly, they’ll feel a lot less motivated to do the job well.
In order to make this happen, develop a system for processing payroll, and double-check everything you do. Even if you hardly ever find errors, it’s worth the trouble for those few little mistakes that sometimes slip through.
#3: Not classifying workers correctly
One common mistake when processing payroll is to misclassify employees as independent contractors, or vice versa. Employees get taxes deducted from their paychecks automatically, while independent contractors get paid the whole chunk, and pay taxes on it themselves. If this gets messed up, you’ll have to spend a lot of time and effort going back and fixing it.
Payroll may be more complicated than simply cutting some checks every couple of weeks, but there are all kinds of ways to simplify the process. All that’s necessary is to know what your options are, and then go with whatever will streamline payroll for you and your employees.
HR Future Staff Writer