The payroll process can be a complicated one. It’s an aspect that many small business owners don’t know how to handle, and often they neglect it or outsource it without fully doing the research. If it’s not administered properly, the end result may be higher costs and potential losses for the company, especially if not all the tax is being calculated correctly.
In this guide, we are going to cover an important aspect of payroll: what you need to do in order to make the process cost-effective.
Contents
What Is Payroll?
This is more than simply administering your staff salaries. In a company, this function includes payroll processing, management, reporting, and tax responsibilities.
Companies need it because it’s both a legal and regulatory obligation; businesses must comply with state, federal, and international payroll laws.
Integrating Your Systems
It’s never cost-effective if you use different software and systems for your payroll functions. If they operate separately and have no way of connecting, you will waste time and money. There will be more manual input, data will be unnecessarily duplicated, and there’ll be an increased risk of error as a result.
If you go online, you’ll discover there are ways to streamline the process. Thanks to payroll software solutions, you can now access HR platforms that automatically sync together. You can seamlessly integrate your payroll into your existing accounting platforms and enjoy unlimited pay runs, and set up multiple schedules and pay rates.
Outsourcing
It may be that you have insufficient resources or knowledge in order to oversee the payroll process for your company. In this case, outsourcing is a viable option. You can delegate the entire process or limited aspects only, according to your requirements and budget. If you outsource everything, your payroll provider will calculate and withhold taxes, prepare paychecks and submit forms on behalf of all your employees.
Temporary outsourcing can work well when an employee goes on maternity leave or temporarily leaves their job due to illness. Whilst you would need to pay the external company for their services, this could be viewed as an investment. In return for their help, you would be freed up to focus on bringing down company costs and becoming more productive and competitive.
Shop Around
In order to save your company money, it’s always important to seek the best deals. This applies to the software and systems you use and the third parties that support them. It’s wise to shop around for the best rates and packages. If you are tied into a contract, there may be nothing you can do. Once it has expired (or if there is no tie-in to your current arrangement), go online to find the best offers on payroll software.
Also, check out possible alternatives to any company you have outsourced your payroll functions too. Companies are always looking for new ways to be competitive, and thanks to modern innovations, they are often able to offer more and more for less money.
Conduct Ongoing Training
It’s essential that your HR team are fully trained on arrival and have refresher courses and updates on a regular basis. This can help ensure your staff is kept up to date and that they have an opportunity to develop new skills. The net result would be a more efficiently run payroll team, fewer errors, and higher money savings.
Make sure you fully document your processes. If they are on the computer and stored in the cloud, everyone can access them, and it will be easier to keep the information up to date and consistent.
Maintain Compliance
It’s essential that tax is calculated correctly and that returns are submitted accurately and on time with the IRS; if not, your company could be financially penalized, and in the worst-case scenario, you could be shut down.
Fortunately, some modern software automatically calculates and files the payroll taxes for you. This ensures company compliance and protects you from nasty shocks during audits.
Let Employees Understand Their Responsibilities
If your staff are late in submitting their timesheets, this could reduce the efficiency of your payroll process. The same thing applies if they’ve changed their bank account but not told you. If you create a company culture where everyone works in tandem, there will be less money wastage as a result.
As you can see, there are many things a company can do to protect itself from wasting money on payroll. If the process is streamlined, the staff are trained, and the systems are good, you can enjoy the benefits and focus on other areas of your business.
