There are more than 30 million small businesses across the country and each one has to have some kind of payroll system in place. Payroll is the backbone of the business and the way they’re able to keep moving forward.
Not surprisingly, managing payroll is a big, important job that can have a major effect on the rest of the company.
So finding the right person to handle the job is crucial to your success as a business owner. Luckily for you, we’ve put together a list of the top seven things to consider when putting your payroll system together and finding the right person to handle it all.
1. Clearly Define Roles
The most important part of any payroll system is to have defined roles and responsibilities for anyone working in that area. There are so many different aspects to payroll that having too many people involved can make things very confusing.
It would be terrible for something to be done twice or, worse, overlooked altogether because the roles weren’t clearly laid out.
As you develop your system and create the procedures to be followed, assign each task to a specific person. Once they are responsible for that task it’s easier to navigate and figure out problems that arise because you know who is in charge of each specific part of the process as a whole.
2. Develop an Organized System
Mistakes made in payroll are not only frustrating, they can often be very costly for the company as a whole. This is why an extremely organized system is so important.
All small business payroll systems are made up largely of different documents and spreadsheets. You have to keep track of employee information (including their W-2s), timesheets, wages, benefits given, bonuses or incentives, and so much more. Each of these things affects the way you pay and have to be kept on record.
Having an organized payroll system from the very beginning will help you avoid any emergency situations and be better able to stay on top of all the necessary tasks.
3. Choose Between Payroll Options
When you begin looking into different payroll management options, you’ll find there are several different ways you can distribute paychecks to your employees. It’s important to make that decision long before it’s time to pay so you can work out any issues.
There are the more traditional options of handing out (or mailing) checks or depositing the checks right into an employee’s bank account.
But there are also newer options like a payroll card where paychecks are deposited onto a kind of debit card for the employee to use. This is a newer option but can be really beneficial to the employee and is gaining popularity quickly.
Every option has pros and cons, it’s just up to you to decide what will work best for your company and employees.
4. Create a Budget
A part of payroll services is to help management create and stick to a budget. Payroll is often the largest expense for a company and has to be continually worked into the budget to make sure everything balances.
Developing a budget plan as a part of your payroll system creation is crucial to its success.
Having this type of budget will help keep everyone on the same page and help you make better, more informed decisions regarding spending in your company.
5. Implement Security Measures
As with a lot of areas in business, security around payroll information is only becoming more and more important. The personal information stored in a payroll system can leave your employees vulnerable if not protected.
Having the ability to implement and then stay on top of the security system around your payroll system is a big responsibility for the person in charge. They need to perform regular maintenance and tests to ensure that everything is as secure as possible. If weak spots are found they should help to strengthen them as well.
Security is an important aspect to consider when preparing to start managing payroll but it’s often forgotten.
6. Understand Tax Requirements
Arguably the most tedious but most important part of managing payroll services is understanding the tax requirements.
Every company is subject to both their national, state, and local taxes. And each of those has its own set of rules and rates you have to follow. Messing up the taxes is one of the biggest ways to get into trouble and cost your company a lot of money.
The person who is responsible for the payroll services must be able to find and follow the tax regulations exactly to keep everyone on the right track.
7. Hire a Professional
If all else fails, it’s not a bad idea to hire a professional to help you set up your payroll system. There are so many technical aspects involved, it can be difficult to know you’re on the right track unless you’ve done it before.
Hiring someone who has previous experience working on a payroll system allows you to utilize that firsthand experience to your advantage. Your company can start off with a well-oiled payroll machine with far fewer kinks than trying to build it from square one.
When you work with a professional they can help train your payroll management team to be able to handle the entire system on their own as well.
What to Know Before Managing Payroll
There’s so much to think about when running a small business. Every moving part makes a difference in the overall success and life of the company. Managing payroll is no different.
How efficiently your payroll system functions will bleed into other areas of the company, for better or for worse. When you take the time to set everything up to be as convenient and streamlined as possible, you’ll decrease the opportunities for problems and frustration. Instead, everyone will get paid correctly and be thrilled to continue coming in to work!
If you’re interested in learning more about the best business practices, check out our other articles today!