With the New Year comes a fresh start—and an opportunity for you to adjust your business processes to become more efficient and effective over the long term. One common area business owners feel the need to address is payroll, which can make or break a company’s ability to succeed and plan for future growth.
The following are some actions you can take to improve your company’s payroll processes in 2017:
Get the right system in place: There are numerous options for running your payroll, with two of the most popular being ADP and Intuit Enhanced Payroll. If you are not satisfied with your current system, do some research and see if there may be a better option out there for you. Having an effective payroll system can save you enormous amounts of time—freeing you up to focus on other aspects of your business.
Double-check employee classifications: It’s important to understand the difference between an employee and a contractor. Basically, anyone who has complete control over his or her working conditions may be considered a contractor, but if that person is required to come to an office or you dictate his/her schedule, that individual is likely considered an employee under current tax law. Make sure you have your employee classifications right to avoid potential headaches and penalties.
Establish a direct deposit system: If you’re still paying employees with paper checks, it’s probably time to update your process. Direct deposit, which you can set up through most banks, allows you to provide timely payments to your employees with each pay period, while reducing waste and saving time. And with the right software, you can even provide your bank with real-time data linked to your books.
Account for taxes accurately: Whenever you deduct state or federal taxes from your workers’ paychecks, you are technically serving as a fiduciary—acting as a trustee over those funds for the government. Therefore, you have a significant responsibility to pay that money to the government in a timely manner. Try to reduce any delays between wage disbursements and the payment of taxes to avoid confusion.
Reviewing these five areas of your payroll processes will help you determine if you need to make any changes as we embark on a New Year. If you have further questions or would like more detailed guidance on this issue, meet with a skilled financial advisor right away.