5 Effective Payroll Tips Every Business-Owner Should Know
[This article was written by Wendy Dessler.]
The payroll is one of the most important processes in your business. If you do not pay your employees as and when they expect, you could dampen workplace morale, be slapped with hefty regulatory penalties and see your reputation as an employer take a nosedive.
Employees are your business’ most valuable asset and it’s primarily through the payroll that you demonstrate your commitment to them. Here are a couple of tips that could make your payroll process simpler, more effective, less cumbersome and less costly.
1. Gather All Information During Onboarding
Make sure your employee and contractor onboarding process incorporates an exhaustive collection of payroll-relevant information. This includes identification, social security numbers and tax information.
Even when, for instance, the money you pay out to an independent contractor falls below the threshold required to issue a W-2 at the end of the year, you are always safer having the information beforehand just in case there’s an unanticipated increase in their remuneration that causes them to cross the band that year.
That way, you won’t be forced to scramble for information when tax season kicks off in earnest.
2. Correct Classification
The rules defining the proper and improper categorization of different employees aren’t always easy for a business owner to interpret especially if you don’t have a background or training in law or human resources (HR). Yet, ignorance is no defense—a simple error in employee classification may attract hefty fines that your business can hardly afford.
For instance, whereas classifying seasonal and temporary staff as independent contractors may appear to simplify your payroll process, such staff may not be eligible for this status depending on the nature of their work, the details of their contract and the amenities they have been provided (such as workspace, equipment, and insurance).
Whenever you are in doubt, seek out the advice of your attorney or an HR expert.
3. Go Paperless
Whenever you issue a paper check, you incur a cost that includes postage, print materials, time and physical storage. Transitioning your entire payroll to a paperless, electronic format ensures that staff receive their pay on time and at least cost to you. It renders redundant some of the expenses that come with paper checks such as lost checks or stop payments.
A paperless payroll also creates a clear, complete electronic record of each transaction that assigns responsibility for an action to a specific user. Therefore, if there’s a need to investigate unauthorized activity affecting the payroll, it’s easier to zero in on the exact persons involved. Importantly, a paperless payroll also allows your business to play its part in forest conservation.
4. Automate as Much as Possible
The higher the number of manual actions involved in running your payroll, the greater the likelihood of human error. Get rid of repetitive data entry by automating the payroll where you can. While some business owners stick to manual processes and spreadsheets due to cost concerns, there’s a plethora of low-cost, reliable, accurate and resilient payroll processing systems for businesses of all sizes (see What is Payroll? – HR Payroll Systems).
Automation speeds up the process, infuses predictability and significantly reduces the number of actions that must be done each time a new employee is added to the payroll. For example, a predefined template could automatically allocate certain information to a new employee’s payroll record once they are marked as belonging to a given category.
5. Facilitate Employee Self-Service
Automation can drastically reduce the amount of data entry needed but it’s difficult to completely eliminate manual entry. You could, however, slash the data entry burden on HR employees and line managers by facilitating employee self-service especially in relation to time and attendance data.
Establish a coherent set of policies and procedures that detail how time off is earned and redeemed. Subsequently, invest in a time and attendance system that enables employees to view time earned, time off redeemed and suggest corrections to time or attendance information.
Payroll is a sensitive process that has zero-tolerance for error. By applying these tips, you can better issue, manage and document your business’ payroll.
Wendy Dessler is a super-connector who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.