Almost 30 percent of small businesses report they spend six hours or more on payroll every month. When you consider most of these businesses have far fewer than 50 employees, it’s clear payroll adds up.
Like other accounting tasks, payroll can be quite time-intensive thanks to legislation. You may need to calculate time off, add up overtime hours, and deal with payroll taxes.
It’s a lot to ask, especially if you’re not a payroll professional yourself.
With all this in mind, it’s little wonder most small business owners want to know how to streamline payroll. With these seven tips, you can make sure payroll gets done right, while freeing up time and money.
1. Streamline Payroll by Reducing Frequency
One of the easiest ways to streamline payroll is to reduce the number of times you need to conduct it. Do you pay your employees every week? If so, you might think about moving to a bi-weekly schedule.
Make sure you check the regulations where you operate. Some states do have rules about how often you need to pay your employees.
You should also see if you can align payroll schedules. If you pay hourly employees on a different schedule than salaried employees, consider merging them. Combining schedules could reduce mistakes.
There’s another bonus to changing how often you pay your employees. It could help your business’s cash flow. With more funds freed up, you could find it’s easier to make ends meet and grow the business.
2. Maintain Payroll Compliance
The last thing you want is to have the IRS decide to conduct a payroll audit for your business. That’s why you should focus on payroll compliance.
It can be difficult to keep on top of all the ins and outs of federal and state law. Nonetheless, it’s important to incorporate this step into your payroll processes.
You should put in place an ongoing review of regulations and remittance schedules. If you use payroll software, see if you can link to government portals and other resources. Doing so can deliver the latest news right to your inbox.
If you have trouble keeping up with compliance, think about outsourcing payroll tasks. A payroll vendor monitors compliance for all their clients. That means you don’t need to worry about checking the headlines yourself.
4. Upgrade Your Payroll Software
We mentioned that some payroll software makes it easy to connect to news sources. In turn, you’ll have an easier time staying on top of compliance.
If your software doesn’t allow you to do this, it might be time to upgrade. Newer software includes this feature and more.
You could also consider an online epayroll system. These web-based clients allow your team to conduct payroll from anywhere in the world, any time.
There are many different options out there when it comes to payroll software. Take a moment and assess your needs, then look for software that addresses those needs. Payroll software backed by the vendor and a great support team is usually your best bet.
5. Delegate Payroll Paperwork
One of the reasons payroll is so time-intensive is because it involves a lot of paperwork. From the time you hire employees, your HR team will be busy filling in forms and filing them.
What if you shifted this data collection task to the employees themselves? Some companies ask new hires to fill out I-9 and W-4 forms themselves.
Take this a step farther and ask your employees to record their hours themselves. Your employees can turn in their timesheets to you for payroll on a certain day. Getting employees to track their hours means you’ll spend less time on timesheets at your end.
A great option for employee-led time tracking is using a paperless timesheet. Using an app or a desktop client, employees can login and record time information. You can learn more about the benefits of this option for your business.
6. Keep Learning
Great software can help you streamline payroll processes. The tools you use are only as good as the people who use them.
Any time you adopt a new payroll tool, be sure you offer your team the right support and training. With it, they can learn how to use new software to greater effect.
There’s another reason you’ll want to keep payroll training and development on the docket. Innovative payroll processing ideas might be hiding within your own team. With the right training, employees can put in place new ideas and even suggest their own.
Training provides employees not only with the skills to use new tools, but the skills to use tools like creative thinking. With some help from your team, you can get creative with the process and streamline payroll in new ways.
7. Combine Administrative Functions
Another reason payroll can become time-intensive is because it affects other tasks. If you administer employee benefits, you may need to know someone’s salary to determine the level of coverage they qualify for.
You may also need to know this information to make the right deductions from their paycheck. If you have a pension plan, for example, contributions may be based on salary. Those deductions may be taken from the employee’s paycheck.
Worker’s compensation insurance is another example. You may need to perform an annual reconciliation report for your insurance. By combining your payroll with your insurance, you can avoid this time-consuming audit.
Combining these systems helps you streamline payroll and other business functions as well.
Make Payroll a Breeze
When you streamline payroll, you’re making your business more efficient. You’ll also be reducing the chances of errors and audits. Finally, a streamlined process helps you get back to the tasks that really matter.
With more time to focus on what matters most, you can prepare your business for growth.
Looking for more great advice about how to grow your business? Check out some of our informative articles for the latest tips and tricks.