To keep employees and regulators alike on-side, you need to make sure that your payroll management abilities are on-point.
This is easier said than done, especially if you are just building your own business and are not confident on all aspects of wrangling payroll matters.
To give you a helping hand at this critical time, here are a few impactful tips that will streamline the payroll process and allow you to avoid common conundrums.
Outsource Payroll Management To A Third Party
This is without a doubt the most straightforward option, and there are a whole host of reasons to outsource payroll duties to someone else, from saving you time to reducing the likelihood of errors arising.
There are also caveats to take into account, such as the costs that come with getting external experts to deal with your payroll responsibilities for you, but you need to weigh these against the potential advantages, such as avoiding fines from the IRS for mistakes and missed payments, in order to make a decision.
Ensure Information Is Accurate & Up To Date
It might seem like a no-brainer to take the time to enter accurate employee data into your payroll system and also to make updates whenever any pertinent piece of information changes, but you would be surprised by how often errors are allowed to persist in this arena.
You also might not appreciate just how frequently personal records do change, such as when employees change addresses, change job titles, have a change in salary or change names after a marriage. Staying on top of all this will help to maintain the accuracy of the data you include in the payroll and prevent inconsistencies cropping up to spoil your week.
Let Employees Know What Is Expected Of Them
While most of the data for payroll is provided by the business, there are also elements for which the employees themselves are responsible, and it is crucial to be open and honest about this with them, as well as to give them the guidance they need to stick to company policies on relevant matters.
In particular it is aspects like overtime and expenses, which may be self-reported by team members, that have to be factored into the payroll equation. Accuracy is again significant in this scenario, and you also need to give workers specific instructions about deadlines for submitting their data so that this is reflected in their pay for the relevant period, otherwise there could be unwanted repercussions for all involved.
When starting out, some businesses choose to pay different employees according to different schedules, perhaps providing top level managers with monthly paychecks while instead giving lower level workers a weekly influx of cash.
This is not strictly a problem, but it tends to be better suited to larger organizations that have the administrative capacity to take on the additional complexity that this brings to the table in terms of payroll management.
Small businesses with fewer resources at their disposal might be better off sticking to a consolidated schedule for paying employees across the board, which not only makes it quicker to process all of the information involved, but also means that you avoid common errors such as duplication of pay.
Stay Compliant As Regulations Change
The laws which hold sway over how businesses are supposed to handle payroll responsibilities are not set in stone, but can change with unexpected frequency. If a change occurs and you are unaware of it or unprepared for its implications, then this could leave you exposed to increased regulatory scrutiny and of course potential financial penalties.
The solution is to stay abreast of the latest news regarding the procedures that exist to control how businesses pay their employees and also how they contribute to the public coffers. Creating a news alert for emerging stories will save you from trouble further down the line.
Be Critical Of Your Processes And Ask For Employee Input
Just as tax laws change over time, you should also be willing to review your own payroll management processes, establish whether they are fit for purpose and make alterations to achieve improvements if any inadequacies are revealed.
There are a few ways to go about this, and asking employees for their feedback on the experience of the payroll practices that you have put in place is a good idea, as it can identify issues that would otherwise have gone unnoticed from a managerial point of view.
Most importantly, make sure to document the payroll management practices that you are using so that you have a manual to follow and also have the ability to effectively audit your current setup when you are looking to ameliorate it.
This may sound like a lot to be getting on with, but it will definitely be worthwhile if you want your business to grow.