Getting the employee’s payrolls processed on time is one of the major responsibilities of any business owner. However, it is also where usually the most mistakes occur. To manage payroll and getting data ready is one area where there is a high potential for errors, and it can take a lot of effort and time to be done accurately. Whereas it can seem like a grueling process to power through, the last thing a business owner wants to see is frustration in their employees due to repeated some small mistake made while organizing their payroll data.
So how does one manage the payroll of their business effectively? With the ever-changing rules and regulations, experts have deduced some useful tips on managing payrolls without causing any major ruckus or any additional costs to the accounting department. Here are 10 of them:
One of the major sources of errors in payroll processing is not having policies and procedures to collect the information accurately and timely. There’s a lot of important information one must keep track of, names, numbers, social security numbers, timecards, overtime, deductions etc., and it’s easy enough for important information to slip through the cracks if you don’t have proper procedures and data management practices.
The list of steps, checks and double checks required to process payroll accurately can be quite long. At the end of the day we all aim for the simplest, most convenient methods to run things smoothly and cut costs wherever necessary. That’s why it is essential that your company should try to minimize the dependency on paperwork and rely on digitized processes to transfer employee salaries and communicating with them about their pay.
For example, Timesheet management apps such as TimeSheets, Timeduty, WeBWorK, and Clockify, can be used to easily track your employees’ clocking in and clocking out timings, performance statistics, attendance overview, idle time usage, web surfing history during work hours, and more.
Moreover, you can significantly simplify your payroll process by outsourcing to a cloud-based service such as Monily that specializes in HR solutions for small businesses and startups. Doing so will allow you to be free from being bogged down in technicalities and provide you complete freedom to run your business.
Maintain a crystallized understanding with your employees regarding what will be included in their payroll, what will be their deductibles, their salary, gross and net income, and all other important information to stave off any ambiguity in the future. If even one or more employees are facing inconveniences with your payroll processing practices, then it can easily lead to unwarranted frustration in your workplace that can seriously harm morale. Therefore, it’s recommended to have internal policies setup that can determine salaries of employees, as well as how they’re processed and be able to correct them if there any mistakes.
You can also simplify the payroll process greatly by classifying employees into different categories depending on their roles. This can help you separate permanent employees from independent contractors and avoid any haphazard mistakes, such as giving permanent employee benefits to contractual workers.
Your company risks being penalized if you’re unable to timely submit payroll information on time. While it is very challenging to keep track of tax deadlines, changing paydays, and quarterly reporting, you have to ensure that you’re actually getting everything done on time. You can create a yearly calendar to keep yourself ahead of things and include all important dates in it, including when timesheets and invoices need to be submitted and when salaries need to be processed. Doing this allows your employees to be aware of when they will be paid and also helps you avoid federal penalties.
No owner of a company wants to take the stress of worrying about an audit. Ensure your payroll taxes are calculated accurately and tax payments are made timely. Ensure that a proper record or all transaction is maintained either digitally or paper based. As tax season comes around, performing your own audits will easily help you pass an IRS audit. Assess your payroll management system at regular intervals during the year to search and eliminate any problems that may be causing problems or putting your company at financial risk, and you’ll be completely free from any audit-related stress.
In proper payroll management, there is so much more than simply sending checks out and paying payroll taxes. As an employer, you are required to issue the necessary W2 forms to employees and 1099 forms to contractors before the February 1st deadline to avoid incurring any penalties. These forms can include Federal Quarterly and Annual Tax Forms, State Withholding W-4 Forms, Direct Depositing Forms, etc.
It is important to remain disciplined when you are trying to handle and execute payroll processes effectively. Whereas many businesses follow a more varied pay schedule such as weekly, biweekly, semi-monthly, monthly, it has resulted in increased payroll mistakes and ultimately results in an uproar by the employees. Minimizing pay periods and aligning the same payday for each employee can be highly successful in preventing mishaps and miscommunication. Also, it’s much simpler to manage one payroll schedule than four or five at once.
While it may seem obvious to make sure you have the correct personal details for every single employee in your company, its importance can still not be overstated. An employee’s personal details can change on a regular basis, and some of that information will likely affect their payroll as well. Regardless of whether this change is due to a promotion, a wage raise, or maternity leave, change of bank account etc. everything needs to be always processed correctly. Although at times it can seem like a juggling act, keeping detailed personal records is something that one needs to definitely stay on top of.
Transitioning to an online, cloud-based financial management system such as Monily will help solve your payroll problems altogether. It will help you to get rid of timecards, decrease costs, maintain privacy, and more effectively manage payroll data. This significantly reduces the burden on the business owner and simplifies immensely the regular and repetitive task of payroll processing.
Subscribe for business tips, tax updates, financial fundamentals and more.
You have been subscribed to our email subscription.