Payroll Advice for Small Businesses
April 26 2017 - Payroll management is not straightforward, and if you are a small business without any payroll experts, it can be a minefield trying to work through all of the legalities and setting up systems and processes.
In the US you are required to obtain an Employer Identification Number before employing anyone. This enables you to report taxes to the IRS. Some states also require a local ID, so make sure that you check whether this applies to you and your business.
You also need to ensure that your employment contracts are all above board and compliant with tax responsibilities. New employees must complete a Federal Income Tax Withholding Form so that the appropriate tax amount is applied to their pay. Depending on your business, you will need to work out various terms such as whether your employees are entitled to holiday pay, sick pay and whether they are paid for overtime, etc.
For larger businesses, getting the right payroll system bears a huge amount of importance. As well as being able to handle large sums of financial transactions and making it easier to change pay increases or sick pay deductions, it should also make it easy for employees to see their records. This will prevent large numbers of enquiries going into the HR department.
A lot of companies look at outsourcing their payroll to save costs and to make life easier. For small businesses, it is easier to pay a bookkeeper to take care of the payroll responsibilities than it is to do all of the work in-house. Not only does this take some burden away from the business, but it also means that payroll is being managed by someone with expertise in the area. This should mean that you are less likely to come into any tax issues that could result in unforeseen costs or even fines.
Keeping track of your outgoings
For small businesses, a large part of outgoings can be through payroll, and you should always review better ways to do things and save money. If your payroll is exceeding your income, then you need to make some drastic changes before your company spirals into debt. A difficult part of management is deciding on the best operating model in regards to staffing. Some companies make the mistake of leaving it too long to review their staff model.
The way that the business world works is ever-changing and roles that were required a year ago may no longer be required today. Looking into automation options could save you considerable amounts of money. As an example, many companies still pay admin staff to create and process invoices, but there are many online tools and apps that will take care of these tasks for you.
That is just one example, but if you are struggling to cut costs, automation is an option that you must explore. Similarly, if you have financial concerns, you may be able to get loan deals at rates that you didn't think you would be able to such as Business Line of Credit loans.
Running a business requires expertise in a wide range of areas, but you don't have to tackle everything yourself. Use the support from the government and employ payroll experts so that you can concentrate on other tasks.