Preparing payroll on a regular basis can be a constant source of headaches. Administering payroll and HR in-house can be costly. According to a PWC study, small and medium-sized businesses spend more to handle payroll associated tasks compared to larger businesses; specifically “In-house administration of payroll, workforce administration, time & attendance, and health & welfare requires a surprisingly large commitment of time and resources—typically over $1,400 per employee per year (PEPY) for large organizations and nearly $2,000 PEPY for mid-size organizations.”
There is no easy way to carry out the essential, but often complex activity of meeting payroll, but you should at least be able to complete it with ease. So, here are seven tips to ensure a stress-free payroll process:
Accurately classify employees.
Regardless of whether you have one employee or 50, one of the most common mistakes made during the preparation of payroll is not having each employee classified properly. This is especially true for a 1099 employee or W2 contractor who is responsible for paying his or her own taxes. Payroll can’t be calculated accurately if employees are not properly distinguished according to their pay, benefits and tax status, so getting your employee classifications right will save you a lot of grief.
Double check your data.
Data entry mistakes such as entering incorrect hourly wages or hours worked tend to cost companies millions annually. Even worse, many of these errors can be spotted if we would only take a moment to double-check our work. In addition to lost revenue, data entry mistakes of this nature can even lead to government penalties.
Stay up-to-date on labor regulations.
As if there were not enough things to complicate the payroll process, tax tables and regulations governing payroll are constantly in flux. Not knowing about an IRS change or a new Labor regulation can cost you both time and money when you have to go back and fix it.
Leverage technology, but don’t rely on it completely.
While it can be argued that an overwhelming amount of payroll mistakes can be attributed to human error, the use of a payroll software package can help eliminate many of these errors as well as save time through automation. However, payroll software is only as good as your input and they can’t perform accurate calculations without accurate and complete information.
Handle paperwork in a timely manner.
Distributing 1099 forms and other tax documents in a timely manner as well as ensuring that all your government forms are filled out accurately will save you a lot of hassles later. Despite the leaps and bounds of electronic filing and processing, paperwork remains an important part of payroll office activity. Don’t let it bog you down.
Put a stop to employee theft and fraud.
Sad but true, a small fraction of today’s workforce are going to engage in practices like intentionally inflating their hours, extending breaks, engaging in activities unrelated to work while on the clock and even conspire with other workers to exaggerate productivity. The effect of these little workplace scams can be surprisingly high, costing as much as up to five percent of an organization’s annual revenue. Paying extra scrutiny to payroll and enacting policies that discourage theft and fraud can save you a significant amount of time and money.
Calculate overtime accurately.
Since overtime results in a higher pay scale, it is important to your bottom line to avoid paying for any more overtime than necessary. That means having a system that clearly defines what overtime entails, when overtime is authorized and how overtime is verified.
© YFS Magazine. All Rights Reserved. Copying prohibited. All material is protected by U.S. and international copyright laws. Unauthorized reproduction or distribution of this material is prohibited. Sharing of this material under Attribution-NonCommercial-NoDerivatives 4.0 International terms, listed here, is permitted.