Payroll is one of the most difficult parts of your business. That’s why most people use payroll companies. The many different payroll tax rates gives room to a lot of error. And when it comes to payroll and the federal government, penalties are strict and often outrageous.
We’ve put a list of good payroll tips and tricks together for your business. Apply these and you’ll be good to go.
- Classify your Employees
- You will most likely have many different types of employees. Examples are temporary, salary, hourly, consultants, and independent contractors. Give each category a brief description to avoid confusion in the future. If you ever run into a government audit, you’ll be happy you’ve kept good employee classification.
- Note all Important Deadlines
- First things first, pay your employees on time each time. An unhappy employee can cause a lot of harm in your business.
- The IRS and your state have their own deadlines to pay payroll taxes. Put these on your calendar so that you never miss a deadline. Payroll penalties are usually high and unforgivable by the government.
- Overtime Calculation
- If you were able to successfully classify your employees, you should know be able to determine which of your employees deserve overtime pay. Overtime is generally paid as time and a half for employees who work more than 40 hours per week. Failure to honor overtime pay on qualified employees could lead to legal action by an employee for years to come.
- Try Direct Deposits and EFTPS
- These days, you can set up direct deposits to pay your employees. This saves you time and money. The IRS has created the EFTPS system which also allows you to electronically pay your payroll tax liabilities using the internet. Most states have also gone to digital systems for unemployment.
- Save payroll records.
- It is extremely important to keep good records of your payroll for up to 5 years. Most payroll companies give you cloud access to all your payroll records. We recommend you keep local digital copies of these records at all times. Make sure to keep the following items in a safe and secure location for up to 5 years:
- Executed W4 forms
- Time sheets
- Cancelled checks
- Employee Infractions
- Maintain payroll confidentiality
- Payroll is a major factor of tension in most businesses. With payroll you are responsible for maintaining private and secure employee information such as bank account, social security, and wages. Remember to keep all payroll records confidential. Ensure that your employees never learn what other employees are being paid. Keep all data in a secure location for only payroll admins.
- Have a Backup Payroll Administrator
- Since payroll is an important and time-sensitive matter. it is important to have at least one other person in your firm that knows how to proceed with payroll in the event of the primary payroll administrator’s absence. Make sure this backup payroll administrator is a trusted employee of your business. Remember, they will be handling sensitive employee data.
- Outsource Payroll If you Can
- With numerous payroll solutions available, consider using an online and digital payroll system. Learn more about our LeafPay payroll software. Never has payroll been so easy.