Avoiding Mistakes With Payroll Pays Off

Running a small business requires most men and women to wear a number of different hats.

With that being said, making sure payroll is done efficiently and effectively is one of the most important responsibilities a company can have. If done late or incorrectly, it can provide problems that will not only throw the books in disarray, but can also create issues with office morale.

In order to make sure your payroll needs are being properly met, keep in mind the following factors:

1. The right hire - It sounds like a stupid question, but did you hire the right person or outside agency to oversee your payroll in the first place? Some business owners get so busy with running their companies that they neglect being really in tune with the hiring process. As a result, they may not get the proper fit in each position that help is required in. Your payroll individual or outside agency should be well versed in the current federal and state tax laws, rules regarding health benefits, workers compensation, and more. Also look for someone who is personable, can juggle a number of tasks at one time, and is willing to work overtime, as meeting payroll is one of a company’s most important responsibilities;

2. Meeting deadlines - Along with the payroll needs of your workers, your payroll person or team must also be sure to properly meet the deadlines for reporting and depositing federal and state payroll taxes. In the event they fail to do this, your company could be hit with penalties that can include interest charges, so stress the importance of getting everything filed on time. In the event filing on time becomes an issue, nip the problem in the bud immediately, as late files can lead to unwanted expenses, something no small business person wants. It is also important during tax season that your payroll representative make sure all tax forms are passed along in a timely manner (typically by Jan. 31) to full-time employees (W2s) and contractors (W9s);

3. Proper filing - Payroll also involves maintaining records properly. While more companies have or are moving to a more automated and streamlined payroll system, still many use things like punch and time cards to record hours worked. Your payroll person should properly record such documents and keep them for a period of time, thereby allowing you to answer any disputes over payroll and/or audits of your payroll records by government officials. This is also helpful in the event there are questions or issues with things like overtime work and time missed due to illness, injury, etc.;

4. Policies do matter - It is inevitable, especially if you have a sizable small business to run, that there will be issues over pay, benefits, time off and more. Make sure you avoid any interruptions to business or morale issues by providing all workers with payroll information in their employee handbook. Things to cover include when checks/direct deposits are to be made, available time off, health insurance qualifications (full-time employees have to be at an employer anywhere from 30 to 90 days to be eligible, though there are exceptions), and how staff can make themselves eligible for overtime and/or bonuses. In the event there will be a change in the pay schedule, make sure that announcement is provided either in a print out or via email to ALL employees;

5. Review procedures - The last item to focus in on is making sure you review your payroll procedures, be it with your in-house person or an outside agency that is handling your payroll needs. With changes in employees, compensation, tax laws and more, it is important to review how you are doing payroll, what issues are coming up, and how things can be improved to make it an even easier process. If you have an individual doing in-house payroll for you, keep in mind that the person may get sick from time to time, want to use their vacation, may be injured and out of work for a period of time. Having a backup person who can do payroll in your company is something that should not be overlooked.