Your employees play a crucial role in the operations and existence of your business. Without them, it would be impossible for you to run your business smoothly and successfully. That’s why payroll is one aspect you shouldn’t take for granted when doing business because the satisfaction of your employees highly depends on the accuracy and speed of providing their salary and other benefits.
So, how do you effectively manage payroll? In this post, you’ll learn some helpful payroll management tips to keep you guided on the best practices of calculating employee hours correctly and providing them with the compensation they rightfully deserve.
1. Use Employee Scheduling And Time Tracking Software
Because accuracy is a must when processing tax and payroll, you should properly monitor your employees’ attendance. With the help of an employee scheduling and time tracking software, you’ll save a lot of time, improve the productivity of your payroll staff, and increase efficiency.
2. Check And Meet Deadlines
Checking accounting deadlines in advance makes payroll processing a lot easier. Prioritize meeting the W-2 deadline to avoid the IRS penalty if your payroll is not done and you’re not ready to file your income taxes. You can request an extension for income taxes, unlike W-2s.
It’s good to have a system or good payroll software in place so you’ll be alerted of important deadlines and have a more effective payroll management overall.
3. Ensure Payroll IRS Compliance
Payroll documents, like tax forms, should comply with the IRS standards. It means that your employees should be classified correctly and that your new business has an employer identification number (EIN). Having a reliable and organized payroll system ensures that your new business won’t incur any penalty from the IRS.
Here are the important things employers should know about payroll tax forms:
- The IRS website includes all the important forms that are related to application or filing and paying of business taxes.
- Business owners are responsible for filling out these forms and passing the correct forms to their employees. When onboarding a new employee, the Form 1-9 Employment Eligibility Verification and Form W4 forms should be filled out by them as these are necessary for payroll processing.
- It’s also faster and easier to process employee salary by asking your employees to fill out a direct deposit form than distributing checks so that you can run payroll. By doing so, the funds will go directly to the bank account of your employees.
- As a business owner, check the forms you have to accomplish to stay on top of tax deadlines, such as Form 1040-ES.
4. Ensure Accurate Information
Incorrect data entry, wrong information, or misspelling can cost your businesses a hefty amount of money every year. A crucial part of payroll management is reviewing all the reports to avoid mistakes when filing and processing all required documents.
Designate a payroll administrator to audit the entire payroll system. This employee will follow up with your employees and ensure accurate information of the W-2 forms before they are sent to the IRS. Reviewing all data and filing taxes early can help you save a lot of time, money, and effort.
5. Create And Track Your Payroll Calendar
What is the purpose of a payroll calendar? A payroll calendar helps your payroll staff with payroll task planning and implementation. It primarily helps your employees understand when time cards are due and when they’ll be paid.
Check out these helpful tips when creating a payroll calendar:
- Analyze certain dates using a regular calendar to give enough time for employee payroll processing.
- Highlight specific information using colored fonts, like for early time card deadlines because of a holiday.
- Provide a copy of the payroll calendar to supervisors and managers to distribute to your employees.
- Simplify payment processing and reduce the confusion of your employees by showing all fiscal year pay dates on the calendar to know the time frames of their paychecks.
- After creating a template for your payroll calendar, you can update it as necessary by saving it on your hard drive.
6. Document The Payroll Process
Documentation is a critical step in payroll management, which helps in auditing and analyzing your payroll system. It allows you to identify the weak points in the payroll process and know what works best for your new business. Documenting all payroll procedures and sharing them with your payroll team ensure that your payroll staff fully understand their role.
Now, you’re ready to face the challenges of payroll processing. With the help of reliable payroll software to automate everything as much as possible and avoid errors, as well as your payroll staff, you’ll have a more effective payroll management strategy. Also, make sure to comply with all state and federal laws governing payroll and tax procedures that could significantly impact your employees and your business to avoid future issues.