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Did you know that 49% of US workers start searching for new jobs after experiencing just 2 problems with their paychecks? This statistic shows how badly payroll issues can affect your business, including denting employee morale. Getting payroll right is crucial if you want to keep your employees happy and productive, and the last thing you want is to leave room for error, as that has massive financial consequences. Check delays, payment inaccuracies, and missed payments can all cost your business more than you think. That’s why it’s important to know the following payroll tips if you’re a business owner.
Set a budget
Having a budget for payroll is crucial. Most experts advise allocating 15-30% of business revenue to payroll, but that’s easier said than done for business owners, as the responsibility goes beyond just writing employee checks. It would help if you took time to understand the impact of payroll on your company’s finances to determine how best way to set your budget. Things like payroll taxes, insurance, and social security are all important considerations when setting an appropriate budget. Ideally, you should calculate the payroll expenses as a percentage of your company’s revenue.
Get an EIN
Any business with an employee staff or planning to hire workers should have an employee identification number (EIN). The Internal Revenue Service (IRS) uses this number to track business income taxes and tax payments. When it comes to payroll, having an EIN does way more than simply ensure compliance with tax regulations. It facilitates an efficient and hassle-free communication process between your business and government agencies. That ensures a smoother payroll process devoid of inaccuracies and legal issues. That means your workers are less likely to have issues with their paychecks if you have an EIN. You can easily find a filing service for a federal EIN online.
Create and maintain a payroll calendar
If there’s one thing you can do to simplify your payroll system or process, this is it – create and maintain a payroll calendar. Doing this will ensure that all your workers get paid on time, as timely checks are the bedrock of keeping your workers happy and productive. Whether you choose to release payments weekly or monthly is secondary; the most important thing is that they are on time. If your workers have to wait too long each time for their checks, don’t be surprised when resignation letters come flooding in.
Creating and maintaining a payroll calendar might sound tedious if you don’t have a dedicated HR or financial department. But you can easily take advantage of pre-made and downloadable calendars and templates from the National Financial Center.
Put a payroll policy in place
Believe it or not, one-third of organizations make at least one payroll error each year, according to IRS estimates. Most of these errors are because of disorganized and inefficient processes. Whether you run a 10 or 10,000 staff strength, it’s important to get your payroll right every time. You can start by putting a policy in place to guide you and every payroll administrator (if you have a larger team). The policy should provide the appropriate guidelines necessary for your team to accomplish payroll tasks efficiently and accurately.
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