In order to have a payroll system that is organized, efficient and systematic you need to ensure that all your employees are paid on time. Also, it is important to know how to protect yourself from IRS penalties by making sure your company follows all the appropriate rules.
For those smaller business owners and companies who are staying on top of their time-consuming payroll and managing their EI payroll services in-house, here is some guidance and 10 easy steps on what they should know.
1) Should employees be paid hourly or receive a salary?
There is a lot of consistency when employees are paid a monthly salary. Management of those payrolls is also easier to administer. If you decide to pay your employees an hourly wage, make sure they are compensated on time.
2) What is the proper pay period?
How often you decide to pay your employees is a pay period selection only you can make. It could be weekly, bi-weekly, or monthly. Once you make that decision you will have a smoothly operating payroll system in place.
3) Who are your workers?
Classification of your employees is very important. You can have full and part-time employees. Contractors that are independent, and interns. All are considered to be your employees. Make sure you look into the Employer’s Tax Guide online for further information.
4) Software that serves its purpose.
Your business needs the best software to ensure efficiency and safety when generating the payroll. One of the most convenient ways to access your payroll information at any given time is to be able to go on a cloud-hosted software system.
5) Saving time and money by simplification.
There are about on average 27 percent of small business owners who spend three to five hours a month managing their payroll. It may be a good idea to invest in an HR task management tool that will keep everything together in one location in case you need to access that information quickly.
6) Keep track of your records.
By placing all your payroll documents and records together you can have quick admittance to them when the time comes. Federal and state law requires companies to keep their records for a certain number of years. Especially W-4 and W-2 forms, tax forms and deposits, as well as employee benefits and vacation time all need to be accurately recorded.
7) State and Federal Taxes.
It is a good idea to make sure that the payroll software you select also takes care of state and federal taxes automatically. This will enable your company to make secure and timely payroll tax deposits.
8) Employee benefits and raises.
Give your employees a raise by giving them a reward. This raise can come in the form of a new laptop or computer, a new phone, an added insurance benefit or childcare assistance.
9) Employee ID numbers.
Some states require an employer to have an employee’s ID number recorded. The IRS can give further information about this necessary requirement and how to obtain an ID number.
10) A payroll budget.
Wages and taxes should be taken into consideration when budgeting payroll. Social security and Medicare taxes are to be paid by the employer. Recording unemployment taxes are also a must.
In general, payroll management is a very important part of every organization. The system put into place should be streamlined. Looking further into the ten elements discussed earlier will make sure the organization is efficient and follows all guidelines required by the government when handling the payroll for all staff and employees. Many of the steps above should be implemented within the framework of the overall payroll system of all companies.
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