This article was originally published in 2016. Some rules, rates or tools mentioned may have changed since — contact us for current guidance.
Managing payroll is a time-consuming task and if not done correctly, it can result in a loss of precious time and money. For instance, late or inaccurate payroll could cause delayed paychecks and late penalties from the IRS. But, do not despair, we've compiled a list of 10 tips to make payroll management simpler.
Here are our 10 tips to streamline payroll management:1. Select a good payroll system
Identify a cloud-based, payroll system that records and documents data, tracks health care insurance contributions, 401K plans and wage garnishments.
2.Identify professionals to help with taxes and payroll
Select an accountant and bookkeeper who can provide full service tax and payroll services. This is a vital step towards effectively managing payroll since federal and state tax laws change frequently.
3. Maintain comprehensive payroll records
Payroll records contain many documents ranging from tax documents to employee deductions and salaries. Therefore, it is very important to keep this information current to ensure paychecks are timely and accurate.
4. Understand business tax obligations
Business owners should know and understand applicable tax requirements to avoid tax penalties and ensure compliance. The Employer's Tax Guide is an invaluable reference to provide information and guidance related to tax obligations.
5. Classify workers
Identify the type of worker (full-time, part-time, volunteer or independent contractor) who performs services for your business as the classification may impact income tax withholding, Social Security, Medicare and unemployment taxes.
6. Establish a separate payroll account
For ease of tracking wages, taxes, benefits and payroll deductions, it is preferable to establish a business account that is separate from other business operations. Separate accounts prevent commingling of funds and operating cash deficiencies.
7. Develop a wage and tax plan
A common mistake for first-time, business owners is neglecting to develop a wage and tax budget. A wage and tax plan establishes reserves for social security, Medicare or unemployment taxes to avoid costly tax penalties.
8. Obtain the appropriate employer identification
A business, corporation or a partnership which sells alcohol, tobacco or firearms or employs persons whose salaries and/or wages are subject to tax withholding should obtain an Employer Identification number (EIN).
9. Determine employee compensation terms
Once a payroll system is identified, a business should determine and define employee compensation terms such as: regular hours, overtime or paid holidays to customize the payroll system.
10. Use a Human Resource Task Manager
The payroll process can be overwhelming and the final tip to streamline this process is the recommended use of a human resource task manager that integrates payroll management with attendance records, recruitment and benefits administration.
Successful implementation of a payroll system is a daunting task, but at SimpliNumbers, we simplify payroll management processes and identify fast, easy solutions to meet your operational needs. Contact us so we can help you get started increasing productivity and streamlining payroll procedures through automation and online processing!
