Payroll is one of the most important aspects of running a small business, yet it’s often handled by business owners who aren’t equipped to do it effectively and who don’t know about the other options available to them. The result? A great deal of stress and wasted time and money due to errors and incorrect payment amounts. To help you make sure your payroll processing goes smoothly, here are five quick tips on how to manage payroll for your small business.
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1) Understand about the taxes
Doing your own payroll doesn’t mean you have to be a tax expert. However, you do need to know about some of your small business taxes so that you can stay on top of them. For example, any time you pay out cash to employees—even in small amounts, say $10—it counts as taxable income. It’s also important to understand how taxes work if your business operates across state lines. Make sure that each state where you have employees is aware of all its tax obligations and always consult with a lawyer before establishing new policies.
2) Know What forms need to be filed
If you’re managing payroll yourself or using an outside service, it’s important to know which forms and documents you need to be filing with both your state and federal government. If you’re working as an independent contractor, it might also be a good idea to familiarize yourself with any additional regulations that come into play. You might think that since you don’t have any employees, payroll regulations won’t apply to you—but they do! It can be just as important for contractors to stay in compliance as it is for full-time employees. Do your research on what paperwork is required.
3) Decide your pay schedule
Perhaps you’re working with payroll professionals, or maybe you’ve decided to process payments yourself. No matter which scenario applies to your business, it’s important to think about your pay schedule as early as possible. This way, you can adjust as needed as your business grows and evolves. In other words, if you initially determined that employees would be paid weekly but later realize that a bi-weekly schedule works better, simply update your plan accordingly. This flexibility will allow you to focus on what matters most—i.e., running a successful business—rather than struggling with mundane administrative tasks.
4) Never miss a deadline
There are a lot of things to consider when you run a small business. Payroll should not be one of them. Sure, going with payroll software might cost you a little upfront, but it will make your life easier and save you time and headaches down the road. The biggest reason? All those hours spent trying to keep up with your taxes and figure out how much money to take out of each paycheck can now be used more wisely—like looking for new customers or brainstorming ways to improve your existing business. With an easy-to-use payroll software like UZIO, setting up payroll is as simple as adding your employees and starting your pay period—the platform does all the heavy lifting so you don’t have to.
5) Use a payroll software
This is a vital tool to have when you are managing payroll for your small business. This software can help you handle all aspects of payroll management. For example, it will automatically calculate payroll taxes, based on where your business is located, and withhold these funds from employee paychecks each pay period. You may also find that you can use some software to manage health insurance claims; schedule employees; create pay stubs; keep track of time worked; and more. Ideally, you should choose software that can be used in multiple states (in case your company grows). If possible, look for free trials—they make great opportunities to test out what’s available before making any purchases.
As a small business owner, there are plenty of decisions to make on a daily basis. Keeping track of payroll is one of them, but it doesn’t have to be overly complicated. Spend a few minutes reviewing your employees’ salaries and benefits each week. And if you’re still not sure where to start, talk with your accountant or bookkeeper about how they handle payroll at their own businesses–they’ll likely have some great advice that can help you easily sort through everything! Plus, they may be able to reduce your workload in other areas so you have more time in which to enjoy running your own company.
