Managing your small business’s payroll can be a bear. It is complicated, with plenty of potential for major issues. Finding ways to make your company’s payroll function run more seamlessly is critical to limiting the chances of costly errors. Management, organization and execution of payroll are all key, but these tips and tricks can make the whole process a little easier.
Choose a Robust Payroll Software Solution
Payroll can be complex, so it is best to use a high-quality software package that handles most of the functions for you and safeguards against potential user error.
Major payroll software players, such as Intuit’s QuickBooks, offer multiple levels of small business support. Whether you need a simple solution that handles simple payroll and tax filing or a more powerful option that includes direct deposit and payments, choose software that can take the heavy lifting and challenge out of your hands.
Take Care of Payroll Tax Payments Right Away
The penalties are stiff if your business fails to deduct, pay or report payroll taxes properly. You could be fined thousands of dollars and potentially face prison time if the violation is egregious enough. File as frequently as you need to, but don’t miss a deadline. It is better to set a relatively small amount aside for payroll taxes regularly than to need to come up with a large amount right up against the deadline.
Set up a Bank Account Just for Payroll
If the cash to pay for all of your business’s expenses is sitting in just one account, it is easier to lose track of how much money you have to pay the bills at any given time. Since payroll is such an important piece of your business, consider setting up a separate bank account for payroll only. It is an easy way to verify that you have the funds necessary to deliver paychecks to your employees and keep on top of ongoing tax payments to the government.
Consider Making Your Employees Salaried
From a payroll standpoint, paying an employee a salary is often less hectic than paying an hourly wage. Salaries are more predictable and tend to be steady over time. Hourly wages, on the other hand, can vary greatly. The number of hours can change in any given week. You might need to account for overtime hours. Managing and keeping track of hours can be an added hassle you don’t need. Putting employees on a salary can make the whole process less of a headache.
Plan for All Payroll-Related Expenses
Having enough money set aside to handle employees’ wages is just one part of what you’ll need. If you have full-time employees on staff, you’ll also need to account for payroll taxes, retirement plan matching contributions and other benefits that may be a part of the total pay package.