Even if you are working with a small team, payroll processing could be challenging. There is paperwork to be taken care of, along with many other responsibilities. Without Eproper planning and appropriate tools, even the savviest business owner can get overwhelmed with payroll processing. Often small businesses do not have a dedicated payroll manager and it becomes the responsibility of the business owner. Payroll processing can also be time consuming and prone to mistakes due to frequent changes in taxation rules. Effective management of payroll processing is very important for your business. Employees always expect their pay checks to arrive on time and without any flaw. So, if you keep your employees happy in this aspect, you are taking a significant step towards employee satisfaction.
Take a look at the best practices in payroll processing for small businesses:
- Payroll Communication Plan
The purpose of payroll communication plan is to clearly communicate the pay structure to the employees and avoid unclear agreements or errors. The motive is to help employees understand their net pay. It’s important to have a proper payroll communication plan and it can be given to the employees along with their onboarding package.
2. Classification of Employees
Classify your employees the right way so that you can file your tax forms in the correct manner. Statistics suggests that there are several companies that do not classify their employees in the correct way which leads to various issues. Classify your employee on various criteria like part time or full time employee, seasonal or intern etc. You must know the difference between the employee types for proper tax filing.
3. Dates and Deadlines
Keep a proper record of all the important payroll dates for the fiscal year. This helps you to be prepared for submission dates. Deadlines are crucial in payroll management because missing the deadlines may lead to penalties and fines which could be financially damaging for small businesses. You can find the dates and deadlinesin government websites.
It’s always a good idea to automate your payroll process with the help of an electronic payroll system or software. There are many software available that take care of the payroll processing, unburdening the business owners. Also, it leads to greater efficiency and helps you focus on other areas of your business. There are payroll software providers that offer free products if you have a limited number of employees. Thus, you can adopt this time saving tool to better manage your payroll processing.
5. Payroll Process Audit
Conduct regular audits for your payroll process to ensure that it’s working fine. It’s also recommended to identify the areas where the process can be improved and automated. A comprehensive audit of your system will help you better your procedures and increase efficiency.
6. Organize Your Records
Organized payroll records benefit you in the long run. Take care to keep all the records in an easily accessible and well organized manner so that you can refer to them whenever required. Make use of software systems which collect and store all the data under employee profiles, making it easy for you to dig in if needed.
7. Ask for Expert Assistance
You must know your limitations in payroll processing. Enlist the weaknesses in your procedures and ask of expert assistance if needed. This might cost you a little but it surely saves a lot of time and money in the long run.
Small businesses have to operate in limited budget and resources and thus it’s important to grasp the techniques for making their operations hassle free. Adopting these best practices in payroll processing could help you greatly in making your procedures smoother.