Whenever a business is incorporated, a major thing that remains forgotten is a payroll system. Even if you have the best HR software, handling the paperwork and meeting deadlines can leave the payroll tasks neglected considering them as a chore.
It may seem like a straightforward task in the beginning but with the growth of the company, the problems even tend to increase to a considerable size. Despite suspicions, we believe that the real picture in many cases is even worse.
Best payroll practices that work
- To be ahead of the businesses that depend only on the best HR software, you may need some help. You can consider the following tips to achieve a successful journey in selecting payroll.
(1) Classifying employees correctly
- One of the biggest challenges in the payroll system is the correct classification of employees. If you don’t classify the employees correctly, you may be getting ready to shoot yourself in foot as the profits and revenues will never be in order.
- You may also lead towards IRS if you misclassify the employees. Further, it can lead to dwindling revenues also the taxes and fines tend to be relatively high. Classifying a lower level employee as a high level one or vice versa can be an open invitation to problems.
(2) Features offered
- Most of the payroll providers offer similar services and in a few of the cases, the services may have included in the base price while in others, they are at additional costs.
- The HR features might be beneficial to smaller businesses having no dedicated HR staff person but are those included in the pricing or you need to pay extra for them? Some providers come with numerous plans with more features than expensive ones. Hence choose your plan wisely.
(3) Maintain cash flow for payroll
- A general rule is to make sure that you have enough cash flow and expenses left for the employees. As you need to pay your employees regularly irrespective of the business’ health, you need to have a positive cash flow always.
- You should have an idea and come up with an exact number that you wish to spend as a payroll expense. Unless you are sure about it, you must set aside 30% of the total revenue as payroll expense.
(4) Setting payroll notifications and reminders
- The finance and account departments stand responsible for handling the money matters. Hence it is natural that they set up notifications, reminders, and deadlines calendars to stay updated with things.
- You might either have physical calendars with thumbtacks pointing to the dates and deadlines or simply have a cloud-based system that makes things more manageable. The same task can be done using an HR system that automatically reminds you of the deadlines. This way helps you and your employees to stay ahead of the compliances with various government bodies.
(5) Tracking dates and deadlines
- Unless you set the deadlines strictly when coming to employees’ payroll, you might incur many fines from the IRS. The IRS has a strict norm regarding the times and deadlines of the employees’ payments.
- These are not only limited to pension amounts, taxes, retirement bonuses, salaries, and even stubs.
(6) Use direct deposit
- The days are gone, when one needed to do manual labor hours to fulfill the employees’ salary needs. All thank the mass adoption of the Direct Deposit that payroll provides.
- Using Direct Deposits allows you to automatically eliminate the work of handing out the salaries. This even becomes helpful in the year-end reporting where one has to joint all the expenses. With the use of payroll, the other departments such as Accounts, HR, and finance get free to focus on other matters that help businesses to grow.
- Save your money with the use of payroll software
(7) Using online payroll software
- No one can follow two ways to maintain employee records as it becomes a tedious job. Significantly when the company grows, you keep adding more employees. Investing in payroll software or an HR system can be a lot more helpful.
- Once learning the curve, payroll software can automatically fetch the details and data of employees and even complete their salary process. The most significant benefit of using payroll practices is the massive level of customizability. Ranging from the bonuses to makes changes in salary slips, everything is a plus.
(8) Create an HR handbook
- Generally, the job of HR is considered as an add-on but it is much more. The HR can bring the insights to the table regarding what other things must be included. Even the FAQs can be added to the book that are the frequently asked questions by the employees (generally on a daily basis). There should be a section about payroll as letting the employees informed about the payroll standards and the dates of the salaries will allow them to expect and plan accordingly.
(9) Organized payroll records
- When you reach IRS to file the taxes at the end of the financial year, you need to specify the payroll. Each penny spend has to be included in the firm. Having an organized record that is either full-time, fluctuations or overtime, the system for everything goes a long way.
(10) Protect the online payroll data
- Online phishing, malware, and cyber-attacks are the latest fears of today’s world. As data is the most valuable asset in the global world, you need to invest in a system to protect it. Whether it is your company’s data, employee’s data, assets or anything else, encryption or security are must to be adopted.
- The smart security systems automatically update themselves to provide a problem-free and lag-free experience. Protecting the business employees in the real world and even at the work in office is the responsibility.
- You must get equipped with these tips and tricks to get the best for your business. Ensure that all your payroll needs are handled and none of your employees face issues in the working of the best payroll software. And even if they find, they are solved as soon as possible.