For any business, a champion amongst the necessary faculties to keep your company running smoothly is an efficient, understandable, and honest payroll system. It is so much more than just writing a check to pay your staff. In this article, we will walk you through the steps that many companies use to do their payroll the right way.
- We will start with basic payroll concepts, programs, and even platforms that are best for handling payroll
- Then walk through some standards of practices to ensure you are always above board
- Finally, how to handle the little hick-ups that come along here and there (like tax concerns)
It doesn’t matter if you are an entrepreneur in a startup or a CEO of a Fortune 500 company, one thing that must always be handled with the utmost care and efficiency is your payroll. Employees work to get paid. It is a simple truth. And when they don’t get paid on time, traditionally happy workers become something else entirely. To keep your staff at their maximum joy in the workplace, having your finger on the pulse of the most common payroll practices is key.
Here are 8 How-to steps to set up your payroll. This might also be helpful if yours is not functioning how it should to keep everyone smiling:
1. Pick Your System
There are three standard ways to process payroll.
• For newer or smaller companies, handwritten payroll is the most often used. It is quick, easy to track, and works well if you have minimal staff.
• The second type is using software like Quicken to track your payroll and keep tabs on things like taxes. This works for most companies if you wish to keep the payroll in-house.
• The last is outsourcing through a payroll company. Payroll companies take some of the hassle away by streamlining your payroll plan with dedicated staffing just for this one need. Outsourcing is common with larger companies.
2. Select Your Policy
Whether you are salary or hourly, most companies have a set date each week, second week, or month in which they pay their staff. Picking your payroll date is crucial if you intend to also pick a cutoff date for incoming timecards, hour sheets, or other payment-related paperwork. It is also good to have documented payroll policies that are easy to acknowledge for your employees, so there is no confusion. This can include, amongst other things, your payroll methods, such as direct deposit.
3. Get The Necessities
To be hired, most staffing agencies and HR departments require a few things. W-2 forms for taxes, I-9 forms for EEO, and social security numbers must be provided. Make sure you have all of the necessary information about your employees to keep you in good standing with all governing bodies, especially the IRS.
4. Compile Banking Info
The fastest and most convenient way to get the money your staff makes into their bank account is via direct deposit. It is quick and clean and usually posts faster than any other transaction done over a wire transfer. It might take a week or two once it is set up, but you will appreciate how easy it is to move payroll to your employee’s bank, and they will love making one less trip to their corresponding branch.
5. Accuracy Is Key
The best way to ensure no one feels they are working more hours than they are getting paid for is to have a quality tracking system to keep an eye on them. A swipe card, punch card, or electronic time clock will do the math for you and they can be certain they are getting their proper compensation. This is also a solid tool for your record-keeping in the event you get audited.
6. Measure Twice
Sometimes employee time cards are a little off. Or there might be a dispute. Before you finalize payroll, give it one more look and make sure it is all 100% accurate. This is where the record-keeping aspect of your tracking system comes into play. You have a paper trail that allows you to access redundant files for verification.
7. Wish It Well
You have everything done, all T’s crossed, all I’s dotted, all commas in their proper place, and now it is time to send those records out into the world, so to speak. If you are sure of its accuracy, the next step is to submit it. This applies to your outsourcing company, but in-house records are a little different. They just require you are accurate before you write the check.
8. Again, With the Paper Trail
The IRS is not a joke. They will come at you with both barrels if they get even a hint of tax treachery. So having accurate files concerning your employee payroll is key. If you have redundant records, as in hard copies as well as digital copies, then if you are audited or need to reference something later, you know exactly where that information is. Always keep your records organized.
It is not hard to create a payroll system for your company. Figure out a plan, put the plan into motion, and cover all your bases. And always keep accurate files. They will save you a heap of trouble should Uncle Sam come calling.