BusinessFinance

The Brief Guide That Makes Processing Payroll Accurate and Simple

About 5.3 million businesses have between one and 19 employees. All of these businesses have something in common.

They have to process payroll to pay their employees. This is a long process because many business owners run payroll themselves.

If you’re about to hire your first employee, you’ll need to learn the ropes of processing payroll.

The more you know, the more you’ll be able to simplify the payroll process. Read on and learn how you can save time processing payroll.

1. Create a Payroll Policy

Payroll issues impact employee satisfaction. A payroll policy gives clear expectations and directions to employees.

The payroll policy should tell employees when you run payroll and how often. If should explain when pay periods are for the year and when the payday is for each pay period.

Be sure to tell employees when they need to turn in timesheets. The policy needs to contain information regarding late timesheets, and how to report inaccuracies.

2. Classify Workers

Before you hire your first employee, you need to make sure that you classify them properly. Businesses are often scrutinized for hiring contractors when they should really be employees.

There are different employee classifications. There are full-time employees, part-time employees, statutory employees, and temporary employees.

Each classification has its own requirements for tax withholdings and benefits. Be sure to review the classification types.

Misclassifying employees could carry penalties and fines for your business.

3. Know Basic Payroll Laws and Deadlines

You might have a software solution to do all of the work, but you still need to understand how payroll works.

Your knowledge of payroll ensures that your payroll process is accurate. There are a number of laws that you need to comply with.

The first is the Fair Labor Standards Act. This law creates standards around recordkeeping, overtime pay, and hours worked.

You also need to be familiar with state and federal tax laws. Once you hire your first employee, you’re responsible for withholding federal income and state taxes. It’s your responsibility to send those funds to the IRS and pay your share in payroll taxes.

4. Automate Payroll

Processing payroll is a repeatable task. Like all repeatable business tasks, you want to automate them.

There are tools that you can use to simplify the payroll process. Software makes payroll more accurate than using spreadsheets and manual calculations.

A paystub generator lets you enter basic information and it performs the calculations for you. You have a pay stub for your records and give it to the employee. All that’s left is to set up direct deposit.

Make Processing Payroll Simple

Hiring your first employee can be a daunting process. Employees expect to get paid accurately and on time. You have a lot to learn before you cut your employee’s first check.

This guide showed you several ways you can simplify processing payroll. Set clear expectations at the very beginning, learn, and automate as much as you can.

Are you ready for more business and financial tips? Check out the rest of the articles on this site today!

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