27 million Americans are starting or running their own business.
With more and more people stepping into the role of entrepreneur, locking down the basics of business has become essential learning. One of the most important fundamentals is the payroll process.
But what exactly is payroll? And how can we better tackle it? Here’s a payroll primer to help you simplify your company’s processes.
What is the payroll process?
Payroll processing refers to the organization and administration of an employee’s financial records. This includes salaries, wages, PAYE deductions, bonuses, and net pay.
While the process might seem straightforward, it can get complicated quickly. Setting up a good payroll system requires knowledge of current regulations and taxes. It also requires careful organization and planning.
Here are 5 tips to help you simplify your company’s payroll system.
1. Correctly classify your workers
Classifying your workers is an essential step in the payroll system. Incorrect classification can lead to serious legal and/or financial consequences for your company.
Your workers should be classified as one of the following:
To ensure your workers are classified correctly you should schedule regular maintenance checks of your payroll data. Regular audits mean you’ll catch any problems with your data early before they can become major problems.
2. Establish a payment schedule and stick to it
Pay everyone on the same day, in the same way regardless of their classification.
Sticking to a consistent pay schedule will help you keep track of who’s been paid and who hasn’t. It’ll also ensure your employees know when and how they’ll be paid on any given week/fortnight/month.
3. Utilize direct deposit
Direct deposit should be your first step in improving payroll efficiency. All banks support direct deposit and most accounting software does too.
Cutting physical cheques is not only slower, but it also costs more in the long run. When using direct deposit there’s no expense associated with physical printing and postage.
Paper-free payroll can also help mitigate printing costs, with employees able to access their information through an online portal.
4. Automate where possible
Automation software exists at just about every level of payroll. Taking advantage of such software will save you time and effort in the long run.
Software like paystubs online helps generate accurate payslips while most accounting software can help automate tax reporting. It’s also a good idea to invest in timesheeting software. This will help automate things like paid overtime.
5. Know when to outsource
Payroll is something you can’t afford to get wrong. Once your company grows big enough it can be worth your while to outsource your payroll process to a qualified professional.
Outsourcing your payroll responsibilities frees up your time to concentrate on what you do best: running your business. It also ensures you’re delegating to a specialist who knows the ins and outs of regulations and tax processes.
Simplify your payroll
The payroll process is complicated but that doesn’t mean it should be difficult. By correctly classifying your workers, establishing a payment schedule, and automating where possible your payroll needn’t be the monster under your bed. And remember, if in doubt: outsource.
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