Payroll was messy, and the team would spend hours on end working to get everyone paid on time. It was a very decentralized process, and they had to have multiple bank accounts in order to pay their team. The foundation of any good process—especially one as complex as payroll—are the procedures and policies. Creating a single source of truth for your payroll processes and best practices will ensure your entire payroll department is working with the same standards in mind.
Payroll Policies and Procedures
Although the HR and payroll departments have distinct roles in an organization, they share functions crucial for a business’ success. While processing payroll is part of a human resource (HR) professional’s training, their expertise is more focused on recruitment and employee records management. By offering a variety of payment options, you cater to these differing preferences and ensure that all employees receive their wages in the manner that works best for them. This can lead to increased job satisfaction and reduce the time you spend addressing payroll-related questions or issues.
The biggest advantage of contracting a PEO is that it can save you time and help you stay compliant. It’s essential that your payroll manager and their team have access to the right payroll training so that they know what their responsibilities are and how your payroll software runs. This will help your staff develop a better understanding of how your procedures work and give them clarity on your payroll policies. By digitalizing and automating your payroll management process you have access to all the data you need, and you can securely store it for as long as the law requires. If a member of your team has any experience in accounting, HR, or business finance, consider asking them to take on some payroll management duties.
Step 6: Calculate net pay and run payroll
Whatever you choose, train your employees on tracking their work time properly to get paid correctly. In a recent survey conducted by payroll services provider OnPay of more than 1,000 small businesses, business owners who run payroll manually said they spend an average of 18 hours a month paying employees. Despite this fact, most payroll advice is geared toward larger organizations, so that information isn’t helpful when you’re looking for ways to make your lean team more efficient.
Manual Processing
You will need complete and precise time cards before you can perform the necessary pay and tax calculations and hand write checks for your workers. This is a standard payment schedule for salaried employees because it offers consistency and predictability for staff and employers alike. This is very common in professional and business services, informational companies, finance, and tech. A payroll summary report shows you an overview of all your payroll activities. This includes employee details like net and gross pay and employer taxes. Maintaining and properly storing these documents is crucial as you’re required by the federal government to submit several payroll report forms, including Form 940, Form 941, W-2s, and W-3s.
- Many businesses appreciate the touchpoint with their employees of managing the process and making sure they are the ones that deal with any issues that come up.
- This takes the task of processing payroll from hours to minutes for busy employers.
- Accuracy is important when processing payroll, and it all starts with properly monitoring employee attendance.
- Especially if you’re hoping to play a more active role in daily operations and client-side projects.
Learning how to run payroll for your small business is crucial to help your business succeed. Employees at these top budgeting software 2021 jobs often live paycheck to paycheck which is partly (and unfortunately) why frequent payments are so important. Once you have that down, check if your business is subject to any additional state or local taxes.
It’s a lot to manage, and the result can be increased labor costs, wasted energy, and a whole lotta potential for error—which is why becoming better at payroll is so important. By including these requirements when onboarding new employees, you can ensure you have everything you need for payroll from the get-go. Some documents, like pay grade increases and timecards, need to be kept for two years. Others, like employment records for non-exempt employees, need to be saved for three. On the flip side, if a worker has more freedom to decide how and when they do their job, they are likely a contractor—and not entitled to any benefits or subject to tax withholding.
Pencil in important dates and deadlines for payroll processing for the entire year
That way, you can build a happy and productive workforce and avoid costly non-compliance penalties that can damage your business. Working with a payroll specialist relieves some of the burden on your shoulders, allowing you to focus on tasks that you’re passionate about or need your assistance. Many payroll professionals can handle anything from collecting employee tax withholding information and setting up direct deposit to distributing pay stubs and filing taxes. First, you need to establish tax and registration information for your business. Homebase makes managing hourly work easier for over 100,000 local businesses. With free employee scheduling, shift planning, time clock, team communication, hiring, onboarding, and compliance, managers and employees can spend less time on paperwork and more time on growing their business.
In other words, the impact that payroll expenses will have on your business’s finances. This is imperative as you need to make sure you have access to enough money to pay your employees in full and on time. Generally speaking, payroll is the process of paying your employees for the work that they do. However, this involves much more than just calculating what you owe them and issuing checks or direct deposits on time. You also need to make sure you pay the right taxes for each employee, create and maintain accurate records, and process claims for expense reimbursements.
