How to Simplify Payroll Processing for Startups
When you are busy growing your business, payroll and financial processing may be one of the last things you think about. However, you can trust that payroll processing is a priority to your employees. The solution is to keep your payroll processing simple yet efficient.
Why is Simplifying Payroll Processing Important?
It is important to simplify your payroll because there are negative consequences for failing to do so in a proper manner. Payroll processing features many moving parts; errors may occur and be difficult to fix if not caught in time. Simplifying your payroll will also help provide assurance to employees and improve their morale.
Common Payroll Processing Errors
Common errors occur that may occur include problems calculating taxes, paid time off, and overtime amounts. These errors can lead to even larger errors when it is time to prepare documents such as W-2 and 1099 forms. Tax errors such as under-withholding or over-withholding taxes may cause potential problems when your company must match these payments.
Consequences of Errors for Employees
Errors affect more than you as the employer. Errors will affect your employees in many ways. They may face negative consequences such as past-due bills due to receiving a wrong paycheck amount. Other issues include denial of benefits when filing for Social Security, Medicare, or Unemployment. If an employee is not aware that income taxes were not withheld, they may have legal problems if they are unable to pay the taxes when filing.
Consequences of Errors for Employers
Employers failing to process payroll properly may face consequences ranging from unhappy employees to criminal charges. Even if unintentional, failure to process payroll taxes may lead to tax evasion charges or other legal issues. If your employees are unhappy, there is a strong chance your production will decline and there will be large amounts of employee turnover.
What Parts of Payroll Will I Need to Process?
Payroll processing includes several actions such as paying salaries, processing employee benefits, and filing taxes. In addition to all of the processing your company must perform, you must also know how long to store your documentation. As a Startup, you may not have the time or the skill to know how to handle this yourself. These processes can often become even more complicated as you hire, fire, and lay off employees over time. Depending on the size of your startup, you may need to hire one or more full-time employees to handle the payroll processing.
Tax laws change often at the federal, state, and local levels. As a result, keeping on top of the regulations can be a challenge. You’ll need to calculate, file, and maintain records of your payroll taxes, including unemployment. There are also tax credits for new businesses you may want to claim. Consider using a professional payroll processing company to ensure this task is performed correctly while allowing you to focus on growing your startup.
When it is time to pay your employees, you’ll need to enter all of their payroll data into your chosen payment system. Data you will enter includes hours worked, salary, deductions, and benefit information. You will also need to print, sign, and hand out paychecks. Depending on the software used, you may need to pay a monthly service fee in order to perform these tasks.
Depending on employee preference, you may want to allow your employees to receive paperless paychecks. This feature may or may not be readily available depending on the requirements of the bank used by the employee. Direct deposit allows you to avoid printing, sorting, and delivering your employee’s checks. Your employees will be able to avoid driving to the bank every pay period, saving them time and hassle. As an additional bonus, some banks will even waive fees for direct-deposited paychecks.
Direct Deposit Recording
Employees that receive their paychecks via direct deposit may want the option to view the information online. It is important to note that this requires a high level of security in order to prevent unauthorized access. A benefit of this option is that you can reduce excess paper use and go completely paperless. There are even options to electronically deliver W-2 forms and other tax documents.
Managing Other Benefits
Other benefits that are important for you to process include health and dental insurance. As a result of the Affordable Care Act, you may not be able to charge a very high premium, so you will need to manage this well. An insurance benefit you may want to consider is life and disability coverage.
Insurance plans can be difficult to keep in compliance with state and federal laws. It is important to stay on top of changes and communicate them to employees before adjusting premiums or benefits. This is a task that is best suited for a professional with vast experience in the insurance industry.
What Can Outsourcing Payroll Do For Me?
Outsourcing your payroll takes the job off of your hands, allowing you to focus on starting and running your business. You can spend more time focusing on keeping your business growing instead of spending time calculating taxes or answering to angry employees. Outsourcing your payroll will not only simplify the processing, it will save you money by reducing the number of employees required for administration. You will also save money by eliminating service charges for common data-entry programs.
When outsourcing your payroll, you will have access to an office staff ready to train you on their software. You will also have easy access to help if there are questions. When you are unsure about a process, you can receive an answer from a professional, allowing you to avoid guessing.
It is recommended that you consider outsourcing your payroll in order to simplify processing. If you’re ready to get started, contact Zuma Payroll and Processing today. See how your startup business can become more profitable by taking a significant amount of administration off of your shoulders.