Payroll is one of the most important processes for a business. Employees need to be paid and taxes need to be filed no matter how big or small the company. While some people outsource payroll completely, others run it themselves or just outsource part of it. Whichever way you do it, it’s important to make sure your payroll accounting is extremely efficient so you don’t make mistakes or lose money in the process. To improve payroll for your small business, follow the tips below.
1. Process All Payments at the Same Time
Some companies do payroll accounting for different types of employees at different times. Having different pay schedules is not very efficient because it can cause duplication of your processes and gives you multiple schedules to maintain. For example, hourly employees may get paid every two weeks while full-time employees get paid once a month. If your company currently splits payroll processing by groups, you might be able to minimize errors if you instead do everything at once.
2. Make the Process Automated
Manually processing payroll is not only time-consuming, but it may lead to errors. If you are doing payroll accounting by hand or typing it into a spreadsheet, it may be difficult to get everything in and all of the calculations perfect. According to the American Payroll Association, errors due to manual processes can lead to extra costs of 1 to 8 percent. Doing payroll accounting without a payroll system can also potentially lead to inaccuracies or employee manipulation, which may result in penalties.
For small businesses, outsourcing payroll might be an even better option, as payroll accounting providers are experts in this area and can prevent unnecessary costs. Partnering with a company offering payroll services for small businesses can help keep errors and tax penalties to a minimum. This also keeps your employees focused on growing business rather than spending valuable time running payroll operations.
3. Integrate Business Systems
Even if you have a dedicated payroll system, if it doesn’t integrate with your HR and accounting systems, it may not be very efficient. Connecting these systems will give you the greatest ROI by helping you free up resources and time and avoid data-entry errors. Accuracy is extremely important for payroll and HR systems and if you are trying to run the two separately, you could have issues with data duplication and inefficiency. With one system, you only have one set of data to maintain and it can be easily accessible for any department that needs it. Many payroll services for small businesses are designed to integrate with HR for this reason and can track reports, as well as paid wages, trends, benefits and taxes.
4. Involve Employees
If you don’t already have it in writing, make sure you write down the details of your pay policy and give it to your employees upon hire. From the very beginning, you want to be transparent so your employees know exactly what to expect. This can prevent issues in employee classification and payroll accounting and outline what will happen if there ever is a mistake.
Once everyone is privy to the process, ask for input. Keep communication open so there are fewer misinterpretations about payroll rules. Plus, if you ask your employees for suggestions or improvement ideas, you will probably get greater support if you ever decide to make changes.