6 Top Tips For Better And More Efficient Payroll Management

Payroll is complicated. This is the process that manages one of the most critical areas of your business: how and when employees get paid. It also includes an element of employee record and tax deduction management.

The consequences for not getting this aspect of your business right could be dire. Your business could incur fines and penalties for making mistakes on tax filings. You could also find yourself responding to employee complaints in court if you improperly dock money from their salaries.

The following are 6 ways you can avoid the above and run your payroll department more efficiently.

1. Keep up to date with rules and regulations governing payroll

Because payroll touches on so many different areas: labor, accounting, taxation, corporate governance, there are bound to be multiple laws, state and federal, determining how you should process your payroll.

It makes sense to keep up to date with them because these regulations frequently change and you could find yourself in trouble if you are unaware of what’s been altered.

One of the things you can do is follow industry best practices in payroll as determined by several labor and taxation bodies.

2. Hire a payroll expert

Small business owners are expected to be everything to their organization. Far from being laudable, this tends to take the owner away from business and profit-generating activity, to focus on backroom operations.

Doing the payroll is especially time-consuming. A payroll consultant can take over this role, or assist the department at work-heavy times during the year, like tax season, or at the end of the month.

You have the benefit of a person who has expert-level knowledge of the payroll process that frees up time and resources and will cut down the possibility of noncompliance and expensive mistakes.

3. Get the right payroll software for your business

Payroll software has become very sophisticated. You can have payroll software that collates salaries and taxes every month. Or, you can have software that integrates your employee record system with salaries and taxes and keeps track of vacation leave and time off.

There are several payroll software options. There is off-the-shelf software that you can purchase for your HR or accounting department to use. Managing employee payments can also be done using an online platform.. The advantage here is that you can outsource your payroll, freeing up your business’ valuable resources, while having the hard work of payroll processing completed and monitored for compliance by an outside party.

4. Simply your payroll process

Sometimes, the problem is that the payroll process is too complex. Reduce how many steps it takes to get people paid at your company.

If your company currently issues salary cheques to employees, you might want to consider direct deposit to their bank accounts. You won’t have to prepare and track individual cheques every month as well as cut down on company resources used to prepare these cheques every month.

Continuity in your payroll process is important also. If the staff member(s) handling your payroll leave you must have a contingency plan in place. Ensure that other people know what to do if this happens This way you will not be left scrambling at the end of the month or during the busy tax season.

5. Organise your documents

Payroll is a hard enough function without the added difficulty of not being able to locate key records. Make sure employee information is up to date and documentation relating to your payroll process over the life of your business can be easily found and is in a readily accessible form.

Having a payroll calendar to keep track of tax filing deadlines and other important dates is useful as well. This way, you don’t miss anything that may result in penalties for your business.

6. Get your employees on board

Few things can go well at your business without your employees’ help. This includes the payroll process. Employees will often monopolize the time of the payroll department trying to understand why certain deductions were made and the like. 

Usually, these misunderstandings come about because they do not understand how the company’s payroll process works. Additionally, they do not have access to their payroll information before it appears on their payslip, they believe their salaries are calculated using some unknowable and unfair process.

It may make sense to set up an employee portal where they get information as well as ask questions.

Payroll doesn’t have to be difficult. Follow these 6 tips, and watch as your payroll problems are eliminated one by one.