As a business owner – especially a small business owner – payroll is a fundamental factor. Not only do you want to make sure your employees get paid on time and in an efficient manner, but you also want to make sure you are deducting and filing the right amount of taxes. A lot of businesses find themselves in a situation where the IRS wants to conduct an audit. So, it is important to look at payroll not only a process of paying employees, but also as one of the main fiscal nerves that runs throughout your small business. It also helps to have a few payroll tips to make sure the process goes off without a hitch. Here are five payroll processing tips for your small business.
- Find a faster way to pay employees. These days, you don’t need to go out of your way to write and sign checks. In fact, you don’t even need to use your own systems to print and sign checks. There are many services that make this process automatic. For instance, your bank may have a service that can calculate the payroll due and will send out checks automatically to your employees. Automating your payroll process can be incredibly efficient.
- Make sure that each and every employee is registered accordingly. All those titles that you give to employees – they aren’t for the sake of making people feel important. Many businesses try to get away with not paying taxes for certain employees by using a number of different tactics. One of the main tactics is registering full time employees as contractors. By doing this, you could put your business in a lot of hot water, so you want to be sure to register accordingly and truthfully.
- Create a separate account for payroll. For the sake of convenience, ease and to monitor cash flow, you need a totally separate account for payroll. Many businesses can make the mistake of thinking they have enough cash flow for a certain transaction, but then realize there isn’t enough left over for payroll. By keeping a certain amount of capital in a “payroll only” account, you won’t need to worry about this problem and your workers will be happier too.
- Hire the services of a payroll accountant. Another way to avoid audits, and to avoid issues with making the wrong classifications on your taxes, is to hire a payroll tax accounting firm, like Patrick Accounting and Tax Services. Not only will they streamline the tax accounting process, but they will also make sure you are filing correctly. The last thing you want is a bunch of fines or penalties – all because you made a simple and avoidable mistake.
- Always pay on time. It is critical that you have a schedule for when payroll is paid or else you will run the risk of being late. Not only that, but if you don’t have a schedule, payroll will seem less of an important responsibility, which is not the mindset you want to have. So, be sure to pick a date for payroll and stick to it.