Cash flow can get tight as companies grow. Although you might be tempted to delay paying your employees, it is important that you focus on managing your payroll. As a business owner, you are responsible for ensuring proper payroll processing. The regulations are quite strict. You have to follow the FLSA (Fair Labor Standards Act) to stay on the right side of the law. Otherwise, you will need to pay some hefty penalties. To help you manage payroll with greater confidence, we offer you these 5 payroll strategies. 

1. Effective Bookkeeping and Payroll Process

One of the best tips that you should consider is establishing an effective bookkeeping and payroll process. It is the only way that you can avoid payroll penalties and keep everything in order. Since having accurate records is necessary for avoiding wage disputes, you have to focus on improving your bookkeeping and payroll process. It is the only way that you can avoid making certain mistakes and to ensure that you cover payroll taxes and wages accurately and on time. Besides, it will help improve your relationship with your employees and help you plan more effectively. Here are some of the best practices that you should consider for an effective bookkeeping and payroll process.

Create a Payroll Schedule: The first thing that you need to do is create a monthly payroll schedule. It will determine when you pay your workers. You can use Excel to create a calendar for bookkeeping and payroll processing, or take advantage of scheduling processes within your bookkeeping and accounting software. It is best that you set the payroll period as either semi-monthly or bi-weekly to avoid any delays.

Study the Tax Requirements: The next thing that you need to do is study the tax requirements. You must know how federal and state tax laws impact your payroll. As the IRS penalizes businesses that are unable to pay their payroll costs on time and fail to follow regulations, you have to gain a better understanding of all relevant laws.

Set Payroll Policies: Once you know more about these regulations, you can proceed by creating payroll policies. If you have a business accountant, they can help you out. Make sure that the policies are simple so that no one is confused.

Conduct Audits Periodically: As there is always a risk of mistakes being made, you need to ensure that audits are conducted periodically. A detailed workflow analysis is recommended for all types of businesses. It will allow you to identify and categorize your business income and expenses to ensure that they have been properly recorded.

Implement Direct Deposits: Instead of offering cash or issuing paper checks to employees, you should consider implementing direct deposits. It will help save time, allow you to go paperless, ensure that workers are paid on time, and prevent the possibility of any mistakes being made.

2. Good Organization and Recordkeeping

The next thing that you need to do is focus on improving organization and recordkeeping. It is the only way that you can avoid mistakes. The more complicated the attendance and expense reimbursement, the harder it will be for you to record everything. Therefore, you have to focus on implementing good record-keeping practices as they will ultimately lead to effective organization. Here are some of the tips you should consider.

Separate Recordkeeping into Categories: A great way to ensure proper records is by separating it into different categories such as reference materials, working files, admin records, and older files. When you separate records into different categories, you will have an easier time locating and managing them.

Appoint Two Employees for Managing Records: For effective organization and recordkeeping, you need to make sure you have two employees to manage records instead of just one. It’s the only way that you can make sure there is always someone available to keep your records organized and navigable. 

Ensure Record Clean-Up: To maintain efficiency, you will have to set aside record clean-up days to ensure that old records that are no longer needed are deleted.

Keep a Detailed Inventory of Records: Document every record properly. Record the location of the record, the time they filed it, and the type of record it is. This goes for all types of records, including credit card statements, loans, financial statements, and so on.

3. Seek Help from a Bookkeeping Service Provider

Since managing payroll on your own is not an easy task, it is important that you get help from an expert. You are likely to encounter complications along the way, especially as your business expands. Since you’ll be focused on the core needs of your business, it will be a tremendous relief to partner with a bookkeeping service provider to handle this side of things so you can focus on leading your team and managing your business. 

It’s common for businesses today to outsource their bookkeeping and accounting needs. Besides, processing payroll tends to be time-consuming and is likely to cause undue stress. If you do not have a dedicated department for bookkeeping, you should let a payroll service provider take care of everything. It will help keep you compliant with all the rules and regulations while also helping boost productivity. Moreover, outsourcing allows you to sit back and relax. 

4. Use Great Accounting Software

If there is one thing that you need to consider to better manage your small business payroll, it’s getting excellent accounting software. Performing payroll manually can lead to costly errors and poor relations with employees. The same goes for using an outdated system. It is crucial that you use a modern payroll system that is packed with the latest features for ensuring tax compliance, direct payments, attendance, and more.

With the right payroll software, you will be able to cut down on the amount of time it takes to complete the payroll process. Recent software provides online access to ensure that employees hae a great payroll experience. They can keep track of their hourly wage, sick leave, social security, retirement plan contributions, taxable income, vacation days, hours worked and even generate digital payslips. Here are some tips you should consider when searching for the best accounting programs.

Your Needs: Take note of your requirements and how your company operates to ensure that you are able to find the right payroll software. You also have to consider your industry and niche as there are certain applications that are dedicated to helping businesses in certain sectors.

Cloud Applications: Since the cloud offers a host of benefits such as access to records from any corner of the globe, you should consider looking for software that has cloud computing capabilities. This will allow you to migrate to the cloud and gain a lot of freedom in your workflow.

Cost: Next, you have to think about your budget. For the most part, there is an application to fit just about every budget. However, be willing to spend a bit more for greater flexibility and features. 

Ask Your Payroll Service Provider for Help: Your payroll service provider should be able to offer expert advice to help point you in the right direction. It’s important that you leverage their experience.

5. Clear Communication with Employees

Communication is integral for managing your payroll. Here are some of the things that you must communicate with your employees to avoid any confusion.

• How wages are calculated
• How payroll mistakes are handled
• Paid time off, sick leave, and vacation
• Employee attendance requirements
• How benefits and promotions are calculated
• An overview of the payroll process and how it works
• Employee classification (contractors, part-time, and full-time).

The above information should be readily available so that your workforce can stay in the know about what to expect from the payroll process.

Conclusion

Managing payroll can sometimes be overwhelming. But it doesn’t have to be. Apply these trusted practices and partner with a great bookkeeper and you’ll set yourself up for continued success, both now and as your business grows. 

Sound Accounts is your complete bookkeeping and payroll partner. We help businesses refine their workflow and find greater productivity at every stage of growth. Contact us today to learn more.

To learn more about the payroll process, check out our frequently asked questions below. 

FAQ

What makes up the core of effective payroll management?

The following tips will help you ensure effective payroll processing.

• Set your budget
• Think things through
• Consider scheduling
• Learn more about the payroll laws
• Develop a payroll policy
• Properly classify all your employees
• Find a payroll service provider
• Opt for the cloud
• Double-check everything
• Plan the employee benefits
• Document the payroll process
• Create a bank account for processing payroll
• Audit the processes
• Maintain good records

 

How do you reduce payroll errors?

Here are some things that you should consider to help you cut down on payroll errors.

• Learn more about the latest rules and regulations
• Never miss deposit deadlines
• Correctly process wage garnishments
• Never rely on the payroll software alone
• Classify your employees correctly and review the classification from time to time
• Report the fringe benefits you provide
• Partner with a bookkeeping and payroll service provider

Why is managing payroll effectively so important?

A clean, clear payroll process helps you make the most of your resources and team members, while keeping them happy, managing your money for growth and staying compliant with government regulations.