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Top 6 Tips and Tricks To Optimize Payroll for Your Business
INDUSTRY NEWS
SPOTLIGHT TOP 6 TIPS AND TRICKS
INDEX
Managing payroll can be daunting when trying to ensure employees are efficiently paid, laws are followed, and accurate records are kept. As Entrepreneur.com states, it’s not easy, but there are ways to ease the stress. These 6 tips can help make your business’s payroll process run more smoothly.
Utilize a Payroll Calendar
Creating a calendar can not only help keep your payroll department on task but will also allow employees to know when to turn in time cards. A payroll calendar allows everyone to see which dates are covered during a pay period and when to expect payments. It also allows both parties to identify any payment dates that may be altered due to holidays.
Classify Workers
Will your employees be full-time or part-time? Will they be hourly, salaried or contract workers? It is important to correctly classify all employees to ensure proper IRS forms are filed, appropriate taxes are paid and withholdings are correct. There are a few considerations to take into account when deciding if employees will be paid hourly or will be salaried. Paying employees on a salary can make payroll easy since the employee will be paid a consistent amount each pay period. However, paying employees hourly allows for more flexibility when it comes to scheduling. Their classification — either an employee or a contractor — determines whether any taxes must be withheld and paid. If you are unclear about which tax laws your employee may fall under, you can use the IRS’s tax classification guide to help you determine what, if any, withholdings will be required on your end.
Know State and Federal Tax Laws
Employers and employees are responsible for understanding payroll taxes. At the federal level, Social Security, Medicare and income tax are set by the IRS. Knowing the percentages
that your business is responsible for and what each employee is responsible for will allow you to deduct the appropriate amount each pay period. Each state, with the exception of a few, dictates its own tax rates. Understanding tax expectations for your state will allow you to prepare your employees to choose and prepare for withholdings as necessary.
Allocate Funds Properly for Payroll
Payroll is often the greatest expenditure a business has. It is essential to plan and prepare for how much revenue should be allocated to payroll to keep your business afloat. So, how do you know what percentage of revenue should be allocated to payroll? It is important to look at the industry standard for your type of business. Service industries, such as street sweeping and paving, can often have higher payroll percentages compared to industries that must also account for costs related to their business, such as food products and manufacturing parts.
Use Direct Deposit
Setting up direct deposit for employees can ensure they are paid on time each pay period. Funds will automatically be deposited into their accounts. Moving to direct deposit can save employers and employees from the risk of losing paychecks or delaying funds from clearing in an adequate time frame. Most payroll programs also allow employees to access electronic payroll stubs, which is a modern convenience
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for the workforce to have at hand. Employees can track their pay, taxes withheld and any other deductions they may have. Many payroll programs will also display INDUSTRY NEWS accumulated and used time off.
Keep Up-to-Date Records
It is vital to keep accurate payroll records, whether in digital or hard copy format. Per the IRS, these records should be kept for at least four years. Planning ahead to collect this information, as well as any necessary tax forms and direct deposit information during orientation, can streamline the payroll process and make it successful for both employees and employers. These 6 tips can help you optimize payroll for your business. Through thoughtful planning and preparation, you can set up a successful payroll process that will SPOTLIGHT run smoothly. For more tips on effectively running your street sweeping or paving business, subscribe to the free digital version of North American Sweeper Magazine.
Sources https://fitsmallbusiness.com/payroll-tax-rates/ https://secondwindconsultants.com/resources/whatpercent-of-your-revenue-should-be-spent-on-payroll/ https://www.netsuite.com/portal/resource/articles/ accounting/payroll-tips.shtml https://www.irs.gov/businesses/small-businesses-selfemployed/independent-contractor-self-employed-orASSOCIATION INSIDER employee https://www.patriotsoftware.com/blog/payroll/payroll-taxrecord-keeping-irs-requirements/ https://www.entrepreneur.com/science-technology/apayroll-service-made-for-small-businesses-to-love/345678
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