By Denny Kampfer
No matter what industry your small business is in, managing payroll isn’t always as straight-forward and hassle-free as you might think.
Payroll is a business obligation that involves more than just paying your employees. It includes dealing with employees’ personal information, handling payroll taxes and adhering to government regulations.
Failure to develop sound procedures that are well executed could result in harsh repercussions like missed paychecks and tax penalties that hurt your company’s bottom line and reputation.
Here are four tips to consider that will help streamline your payroll process.
Make sure employees' information is current.
Tax laws change on a regular basis. So do your employees’ circumstances. Stay up to date on the status of your workers. Changes in marital status, family size, annual income or deductions may prompt the need for adjustments to employees’ tax information. Make sure employees inform you of any changes so you can update your payroll system. Keep records of wages and tax payments while they are employed by you. These records may be needed by employees when applying for home loans or other forms of credit.
Pay your employees on time.
This may go without saying, but it’s vital that you pay your employees on time, every time. The most common wage payment schedules are weekly, bi-weekly and monthly. If you don’t pay on time, you might be subject to penalties. Your employees rely on regular wages, so if a paycheck is late or is for a wrong amount, it’s a big deal. One effective way to pay your workers on time is to set up direct salary payments through your bank.
Automate state and federal taxes.
Consider using payroll software that automatically accounts for state and federal taxes for you. This will ensure that the money needed for payroll taxes is applied correctly and prevents a costly mistake if you forget about payroll tax deposits.
There are no penalties with the IRS for depositing your payroll taxes too frequently, however there can be large penalties for depositing late. Also, paying payroll taxes when employees are paid eliminates any temptation to use that money for other business expenses.
Hire a payroll expert.
You probably don’t have the expertise, time or interest to handle payroll effectively. Because it is vitally important that payroll goes smoothly to keep the IRS and employees happy, consider hiring an accounting firm specializing in payroll management to take care of it.
While it may seem like an extra expense, it could save your company money – and hassle – in the long run. It will also free you up to focus on running and growing your business.
For more information on payroll management and other business and accounting matters, contact us at 330-332-4646 in Salem and 330-385-2160 in East Liverpool or online at www.bwlkcpa.com.