Four Payroll Management Tips for Business Owners
Payroll management is a confusing and challenging task. One wrong move and several errors can quickly spring up without a doubt. That’s why most companies prefer to outsource payroll services to provide them with the right services that they need and more.
But if you’re one of the few who still prefers to do it internally, then don’t fret. Here are a few things to keep in mind to maintain an accurate payroll.
Classify all workers properly
You should adequately classify all employees as either independent contractors or employees. With employees, it’s a must to collect and pay the taxes as well as pay overtime wages. You also need to follow the minimum wage laws, which aren’t necessary for independent contractors.
With a contractor, you need to use behavioral control and even your relationship with the worker. You can also use financial power to your advantage to ensure a good working relationship with them.
Classifying workers in the wrong category may cost you back wages, interest, taxes and penalties. That’s why you need to input all employees in the payroll system accurately. On the other hand, independent contractors shouldn’t be on your payroll.
Run a profit and loss statement
Keep an accurate and up-to-date profit and loss statement every month. Doing so will give you an idea about the monthly revenue and expenses of your business.
Having one is crucial in accounting for new taxes that your company owes. Moreover, it can also bring your attention to specific expenses that are unnecessary or can be either reduced or cut altogether.
Use an automated payroll system
Using a manual payroll system makes you prone to a lot of errors. You can’t guarantee that you’ll be able to punch the right numbers all the time or accurately record every detail. It’ll also be hard even to remember to include all the necessary information in the payroll process all the time.
With an automated system, you get to reduce the chances of error significantly. To do this, you need to have access to a reliable online payroll system that will automatically calculate the pay as well as the taxes of your employees.
Track the attendance
One of the best ways to get the right salary for your employees is to track the time that they spend at work accurately. It is very much applicable for workers who earn hourly wages as well as employees who are eligible to be paid for over time.
You need to find a way to track their time and attendance more efficiently. One way is to use online software where employees can log in to their account and log the start and end of their shift. Since employees do it online, employees who are remotely working can easily use it, too. Using such software can also help prevent time theft since you can compare the work schedule and agreements to validate it.
Bear in mind that payroll is continually changing. Governments are continuously passing laws to keep up with changing demands. That’s why you need to keep up with the changes and get as much information as you can from reliable sources.