payroll management

The Ultimate Guide to Payroll Management: Best Practices for Accuracy and Efficiency

If you’re a small business owner or a bookkeeper for a business with many employees, you already know how important it is to keep your staff happy. One of the quickest ways to start a revolt, or at the very least significantly reduce morale, is to make mistakes with employee pay that cause checks to be missing or short.

Of course, mistakes with payroll can also cause a host of problems for an employer. Even minor reporting errors can trigger thousands of dollars of fines and fees from the IRS. Miscalculating wages could result in overpayments to employees, and clawing that money back is a time-consuming process that often leaves employees unhappy.

The best way to avoid all these situations is to adopt a set of payroll practices and procedures designed to maximize efficiency and accuracy. While the exact means by which your business does payroll may differ, incorporating the following suggestions is generally a good idea.

    Get a suitable software program.

    Payroll software can be a separate program or an “add-on” to your existing accounting software. However, businesses often hesitate to invest in these programs until payroll becomes overwhelming and mistakes are made.

    Instead of waiting for a disaster, invest in payroll software now. Take the time to learn the new system when you only have a few employees. As you learn the system, adding more employees will be easy, and running payroll for your large business will be less hassle.

    Have a great time system and a reasonable attendance policy.

    Time clocks have evolved a lot over the last thirty years, and it’s probably time to invest in a system that communicates directly with your in-house accounting software. Specifically, look for a time clock that allows employees to scan in with a fingerprint or face scan; this can prevent a lot of employee errors and significantly reduce the likelihood of time theft.
    Time clocks that communicate directly with your payroll and accounting software will also ensure very little chance of errors being made when timecards are entered into the system.

    Couple the new timecard system with a reasonable and legally compliant attendance policy. Docking time from employees for rule infractions is one of the most common reasons employers get investigated by the Labor Department. Avoid this by implementing one standard time and attendance policy with clear penalties for tardiness and no-call no-shows. Put this policy in writing and ensure that it is clearly posted.

    At the same time, have written policies regarding the use of PTO, sick leave, bereavement leave, and vacation. Use software to track accumulated leave time and types, and ideally, have a system in place that allows employees to check their balance.
    Have a set time to do each task.

    When it comes time to actually “do” or process payroll, actually schedule a block of time at the same time each week to perform this task. Ideally, let employees know when this time is so that you are not interrupted and that they know that they have to contact you by a certain date and time to make changes to benefits or address errors with the time clock.
    Implementing a set time to process payroll will also help you manage time and force you to complete a task that most business owners and bookkeepers don’t look forward to. If you run a large company or your payroll is particularly complicated, divide the task into smaller pieces. Again, aim to inform employees of these deadlines so they know to come to you with issues before you have finalized the checks.

    Conduct periodic paperwork reviews.

    One of the most commonly overlooked payroll tasks is periodically reviewing employee paperwork. In many cases, employers have their staff fill out a packet of paperwork when they’re onboarded; then, they never look at that paperwork again. Instead, schedule a time each year to remind employees to update their tax forms, retirement plan contributions, and insurance beneficiaries.

    This allows you to enter changes all at once instead of one by one throughout the year as employees “remember” that they need to make a change. It also allows you to schedule these tasks for when business is slow enough that scheduling time to do this is more convenient.

    Know when it’s time to outsource.

    Of course, there comes a point in the growth cycle of every business where an owner or manager just has to make the call that it is time to hire an outside professional to handle payroll. If you are following all of the suggestions on this list but are finding that you can’t keep up, it’s likely time to outsource this task and spend your time growing and running your business.

    By outsourcing payroll, you can ensure your employees have payroll experts to handle everything from administering benefits to compliance with local and federal tax codes. In the meantime, your employees will get online access to a system that allows them to view their pay stubs in real-time, along with important information about their PTO and insurance benefits.

    Get in Touch with Nine Line Accounting Today

    Hiring a firm like Nine Line Accounting can be a great way to ensure your payroll is done correctly while keeping your employees happy. Our staff has years of experience helping out companies of all sizes in various industries. Whether you’re looking for someone to handle week-to-week payroll checks or ensure that you comply with IRS rules and regulations, we can help!

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