Payroll issues may cause your employees to be unhappy, stressed, and unproductive. Make sure you choose a payroll system that works for your unique business so you are able to pay your employees on time and avoid any problems.
Things to consider when choosing a payroll system include: budget, number of employees, and growth projections. Read on to learn more about small business payroll options that may help you pay your employees on time.
The first step in managing your small business payroll options is finding the payroll company that best fits your needs. Below are four key considerations:
Below are tips you may want to consider to run payroll once you’ve found the right service.
A key step in operating a small business payroll is making sure to send employees all required tax forms. These would include I-9 and W-4 forms for salaried employees and W-9 materials for contractors.
Time tracking is a huge part of running payroll operations as a small business – it’s how you calculate total wages for a pay period for hourly employees. Time and attendance software may provide an easy way for employees to clock in and out of work. You should be able to integrate this software with your payroll service for seamless, instant payroll calculations.
Calculating employees’ net pay and withholding amounts is necessary for tax compliance. You should consider educating your employees on what is withheld from their salary and why so they know their pay stubs are accurate. A well-run human resources department or outsourced HR service may help handle this for you.
After the above steps, it’s time to pay your team. Your payroll software should help to automate this process. Come payday, your team should be able to receive their wages with no action on your end.
Payroll service providers help ensure that you’re accurately withholding and depositing taxes from your employee’s paychecks. This will include FICA taxes and income taxes, and separately, you must also pay unemployment tax. Thoroughly researching your tax obligations and seeking help from an accountant may help you understand what is required.
Filing employer tax returns on time is also key for successful small businesses. You should give yourself ample time to gather the necessary information and submit the returns. This way, you may be able to get through the mountain of paperwork with plenty of time to double-check your work.
You should consider implementing the below tips to manage your small business payroll options.
Obtaining an employer identification number online is fairly simple, and it’s a requirement before you start paying employees. Your identification number acts as your federal tax ID – it’s basically your company’s social security number. You’ll also need it for paying taxes, opening bank accounts, and applying for business loans.
You should be consistent in how and when you distribute wages to salaried, hourly, and contract employees. This may be every two weeks via direct deposit or every week via an online payment service. Standard pay frequency options are usually weekly, semi-monthly, or monthly.
Small business owners should set employee salaries consistent with industry averages. Part of this is considering what competitors might offer for a similar role. Offering pay and employee benefits on a similar level, but within your budget, may help you attract and retain talent. Keeping future raises in mind is also typically important when deciding employees’ starting wages.
You should understand basic labor and wage laws and comply with both. This means adhering to minimum wage regulations and properly paying non-exempt employees for overtime hours.
You should stay up to date on constantly changing regulations in your industry. This might mean subscribing to industry newsletters or following blogs or niche news outlets. If doing the work to keep track of regulations seems like a big hardship, you may want to consider hiring lawyers or accountants to consult with.
You can set up your payroll system manually, via outsourcing, or through online software. Below is some information on each method:
You should use clear language to describe how employees should document and submit their time worked. You should also cover how you’ll set salaries, payroll schedules, and payment methods. Additionally, you should consider detailing how employees can request adjustments if their paychecks are inaccurate.
Your payroll policy and software are incomplete without a time-tracking system to power them. These services are often desktop apps or websites, so setup should typically be quick and easy. Connect your system of choice with your payroll service, and you’re likely good to go.
Even with your payroll fully automated, issues may still arise, and someone on staff should be the go-to in these moments. Delegating these concerns to a payroll manager may help to keep your plate free for higher-level concerns while keeping your business on top of employee pay. This can be someone already on staff, or it can be a new team member you hire.
Federal law states that business owners must retain payroll records for three years and payroll tax records for four years. This means you should create a well-organized system for these documents. If any tax authorities ask for them, you’ll know exactly where to find them.
You’ll need ample cash flow to pay your employees. You should regularly check your cash inflow (money that comes into your business) and outflow (money used to pay for expenses and operating costs). If the former isn’t big enough to cover the latter, you might struggle to cover your largest expenses, including payroll. That’s typically a fast route to high employee turnover rates, but you may be able to avoid it if you obtain extra working capital through small business funding.
Even with the right payroll solutions in place, your business may still struggle with cash flow as it grows. This may make paying your employees more difficult, but SmartBiz may be able to help change that picture. You may be able to utilize SmartBiz to apply for SBA loans, bank term loans, and custom financing options to affordably increase your cash inflow. Check now whether you pre-qualify* – it only takes five minutes, and it’s a great first step toward paying your team consistently and on time.