Payroll, the system for processing employee salaries, bonuses, and deductions, can be a headache - especially with the more employees you hire. Payroll management is also subject to labor laws and adequate documentation, which means that mistakes with these points can cost you. Here, we’ll look at a few ways you can keep on top of your payroll and avoid any costly slip ups.
Keep Yourself Updated on State and Federal Tax Procedures
Taxes such as Social Security are set by the IRS. State taxes, however, vary from state to state. (I bet you saw that coming!) For example, Maryland’s minimum income tax rate is 5.75%, while North Dakota’s is set at 2.90%. This also gets more complicated once you include employees that work across state lines, and employees that are working from home in a different state than where the company’s address is registered.
Payroll Employee Retention and Turnover
Losing employees, especially those that you’ve invested time and money in, is painful. Employees involved in payroll have a lot on their plate, and oftentimes the payroll process is complicated. At times, this can cause friction between payroll employees - some employees may even quit. In order to mitigate this, you should standardize the payroll process, and promote internally to reduce the learning curve related to your company’s payroll process. Ball State University has a good example on how they manage to implement these tips (and others!).
Automate The Payroll Process
On the same vein as standardizing the process, you can also automate as much as you can of the payroll process. Automation reduces the risks of human error, and frees up your payroll specialists for other higher-level tasks.
Look into software that has good reviews, which companies like G2 can help you with.
Document The Process
Again, payroll can become convoluted, and it just gets worse year after year. Hiring someone to help you organize your payroll process is a lifesaver. We recommend a tax preparer for the job since, as previously mentioned, federal and state taxes can get a bit complicated. Your Fractional CFO is the perfect person to be your liaison between you and your accountant.
Documenting your payroll process will also help you with audits down the line, and you can identify any weak points along the process. Also, we recommend having everything documented in a manual for the payroll staff to reference. It just makes life much easier for everyone involved.
All in all, we hope these tips for staying on top of your payroll helps you keep your company up and running smoothly. We know that payroll can be a headache, so feel free to ask us any questions about payroll, taxes, or other financial advice that may be on your mind.
Fractional CFO and Founder of Adam Kae & Associates
LinkedIn: Adam Kae & Associates
Disclaimer: This article contains information and opinions from Adam Kae & Associates, and the information and opinions should not necessarily be seen as the best possible solutions for your business. Please contact us at email@example.com to help you find the best solutions for your business.