3 Tips For Streamlining Payroll
If you are involved in processing payroll for a business, you already know how much of a hassle it can be. There are so many details to pay attention to, not to mention the fact that there are strict deadlines involved. However, you may be able to save yourself some time and effort with a few simple changes to your methods. They could make your job easier, and even benefit other employees thanks to a decreased frequency in errors.
If you want to really drill down into improving the payroll process, there are all kinds of things you could do. For example, you could outsource to a company like Checkissuing; this could free up your time for other important tasks while they take care of the busy work. You could also start using time-tracking software for hourly employees, which is a game- changer if you’ve been manually tracking hours.
If you just want to start with the basics, though, here are the top three things you could do to streamline payroll.
1. Build A Payroll Team
No matter what size your business is, qualified payroll staff should be considered essential. Small business owners may try to take on the responsibilities themselves, but this is often being added into a schedule that’s already packed full. If the people in charge of payroll are unqualified, this can lead to mistakes, damaged trust with employees, and time wasted fixing errors.
In many cases, this practice continues because hiring someone who’s specifically qualified to process payroll doesn’t seem justified. However, this type of thinking could easily hold a business back; when its owners or managers are spreading themselves thin with too many responsibilities, that makes it harder for them to lead effectively.
That is why a payroll team is crucial. Not only will they take the burden of payroll away from people who could be using their time better, but they’ll also reduce the risk of penalties and errors due to inadequate work.
How can you put together a stellar payroll team? There are two sides to a great candidate. On the one side, you should look for someone who’s qualified in terms of math skills, education in accounting, previous experience in payroll, etc. On the other side, they should have a solid work ethic, personal integrity, and adaptability to work culture and company processes.
2: Establish A Process For Onboarding Paperwork
This mostly applies to small- and medium-sized businesses, but it’s worth covering here because of the number of organizations who don’t prioritize employment forms. These forms may not seem necessary if you’re processing payroll manually, but you could regret not completing them sooner if you delay for too long.
Various forms are required according to state or county legislation; you also have to comply with federal regulations in terms of using the right forms and adhering to deadlines. If you delay implementing these forms, you could end up having to pay fines, or at the very least going back over multiple payrolls to correct errors.
Typical employment forms include:
• The Direct Deposit Form, which enables businesses to deposit paychecks directly into employee bank accounts (as opposed to printing out a physical check).
• The I-9 Employment Eligibility Verification Form, which verifies the employment authorization and identity of anyone who’s hired in the US.
• The W-4 Form, which tells employers the correct amount of taxes to withhold from employees’ paychecks.
• The W-9 Form, which the IRS uses to estimate taxes owed by contractors based on income from each client.
If you want to do things right, these forms (and any other applicable forms) should be completed promptly for employees and contractors alike.
3. Automate The Payroll Process
If payroll seems to eat up way too much time, you may just need to invest in a reputable payroll software program. Options like Rippling and QuickBooks give you a variety of capabilities, including efficient payroll processing.
This is especially important if you have limited payroll staff. Doing payroll manually is just asking for avoidable errors, particularly if the people doing it are rushing through the process because they simply don’t have the time to give their full attention to it.
With payroll software, you won’t have to worry about calculating tax withholdings, accidentally skipping someone, or other common errors. Payroll will still require careful attention, but the whole process will be much faster and simpler overall.
Things You Shouldn’t Do When Processing Payroll
Payroll is full of intricacies, and if you don’t know exactly what you’re doing it’s easy to overlook something. Here are a few common payroll mistakes to look out for:
• Miscalculating Overtime Wages
Even if you already know that overtime is “time and a half”, or 1.5 times the regular hourly rate for time worked over 40 hours per week, that’s just the federal regulation – your state may have laws that supersede that. For example, Nevada, California, and Alaska employers have to pay overtime when their employees work over eight hours per day. What happens if you get this wrong? You could potentially incur penalties, backpay, interest payments, and even lawsuits.
• Not Keeping Accurate Records
Even if you don’t think payroll record-keeping is necessary, you will change your mind pretty quickly if the IRS decides to pay you a visit. In 2021 alone, US companies paid $13.7 billion in fines to the IRS because they failed to comply with payroll tax laws. Companies are required to keep records on information like copies of W-4 tax withholding forms, dates and amounts of wages paid, and more.
• Failing To Process Payroll Within A Consistent Time Frame
Payroll isn’t something that can be processed whenever you have time; it should
- adhere to the minimum frequency specified by your state’s legislation, and
- be consistent in order to maintain employee trust.
The Takeaway
Payroll may not be simple, but you can still simplify it in 2022. With the right strategies and tools, you can effectively fine-tune your payroll process perfectly.
