Payroll software are especially designed to handle and organize employee salaries, loans, allowances, and taxes.. These include keeping track of their work hours; calculating wages, withholding taxes and deductions; printing and delivering cheques, and most of all, paying taxes to the government.
No matter what the size of your enterprise is, operating payroll software or system can be time-consuming and stressful, as it is a highly regulated business obligation. You need to be accurate to make sure that you abide by the rules set by the government. If these are not done properly, it can reap serious consequences.
Here are 8 payroll tips for small business owners who are concerned about getting it right.
1. Choose the best software
When exploring payroll software for your company, you must first do a thorough research about what your business needs from this kind of solution. You need to give full consideration to your business’ size because there are customized systems for small companies which give simplicity and ease of functions. There are newly-developed programs that are cloud-based or hosted from the internet which can be accessed anytime, anywhere. This boosts productivity, collaboration, and communication within your workforce by automating the procedures and reducing the chances of mistakes due to manual work.
2. Determine how much and when you’re going to pay your employees
Some business owners pay their employees hourly, while others like to do it bi-monthly for consistency. However, there are employers who give salaries weekly or bi-weekly. The payment scheme can be determined through the workload and responsibilities of your employees. Knowing when to pay your employees will keep you organized. Knowing how much to pay your employees will keep you on track regarding how much money is coming in and out of your company.
3. Organize your workers
It is important to classify your workers. Whether you hire people full-time, part-time; or if you want independent contractors, or even interns, they all play important roles in your company’s growth. Your employee details should be stored in the payroll software so you can keep track of who is performing well, who to promote or fire, while basing one aspect on their time and attendance discipline. Just because you are paying them doesn’t mean that is the legal way, so, an organized workforce can really help.
4. Factor in raises and benefits
If you want to make tax paperwork on your end simple, you should definitely consider giving your employees additional benefits and raises. A stipend for childcare, health, dental, and vision insurance, a new laptop, a cellphone, or even a retirement plan, should not be treated as additional expenses because the tax-free fringe benefits of these rewards will save you a lot of work hours.
5. Create a budget
Not only do you need to allocate money for your employees’ salaries, you should also consider the taxes that must also be paid to federal and state governments. Depending on where your business is located, you might also be required to pay other employment taxes. Employers are required to pay Social Security, Medicare taxes, and even unemployment taxes, so, you should plan ahead for these kinds of extra expenses.
6. Automate state and federal taxes
Out of all the features of payroll software available in the market, you should maximize one that automatically takes care of your taxes. This can avert you from forgetting them and finding yourself the subject of a legal dispute with tax authorities. It also ensures that the process is always done and completed in a timely manner. If you are employing the services of a payroll-processing company, you can ask them to make the deposits for you. If you do not keep up with your taxes, it can get expensive really fast and you can be levied a 100% penalty for failure to turn over the withholdings to the government by the due dates.
7. Find out if you need an employer ID number
An Employer Identification Number (EIN) also known as Federal Employer Identification Number (FEIN), is a unique nine-digit number assigned by the tax authority in your country to business owners/entities for the purpose of identification, and to process your taxes efficiently. Some states require companies to have and EID. If you don’t have one, you can apply personally or do it online.
8. Keep track of everything
Having a payroll system is a huge relief. However, you can also simplify it even more by keeping all the physical records and documents in one place. For example, it is a good idea to keep track of leave forms and tax forms. Double-checking can be a tedious work but it will be beneficial for you in the long run. If you are not sure about how to do it, you can ask help from a professional.