As a business owner, you understand that payroll is a vital part of your operations. However, if you are like many business owners and deal with limited cash flow, you may be tempted to put off paying your employees to manage your costs better. This is not a smart move – payroll is a legal obligation, and if you fail to meet these requirements, you may face serious consequences on the state and federal level.
While this is true, it does not mean that payroll processing has to be a daunting or difficult task. There are several tips that can help you along the way, from planning ahead to using the best payroll software. Keep reading to use some of the most effective and helpful tips for managing your payroll process.
Maintain Accurate Records
As an employer, you can protect yourself from certain payroll penalties by maintaining the proper time records regarding when your employees worked, if they were off and if they are entitled to overtime. What must be tracked depends on if you have exempt or non-exempt workers. By maintaining accurate and updated records, at all times, you can avoid serious wage disputes regarding payroll.
Pay Your Workers On-Time
For most businesses and situations, the state will dictate the minimum frequency that your employees should be paid. You can choose to pay your employees more often if you like, but you cannot legally pay them less than required. You can typically choose from four main pay time periods – monthly, semi-monthly, biweekly, and weekly. To help manage your cash flow better, choosing a biweekly or semi-monthly pay schedule is best.
It could also be smart to publish your payroll dates one time per year so that employees can manage the expectations of when they will be paid. If your payroll is not handled on time, then significant federal and state penalties may be issued – sometimes, it can even lead to your imprisonment.
Deduct the Proper Withholdings
Each of your employees will fill out forms that tell you how much should be deducted from their paycheck. Individuals may also have retirement contributions, charitable deductions, and insurance premiums withheld. However, there are usually state and federal tax requirements regarding what must be taken out during your payroll processing.
Be sure the company has a signed consent from workers if they are deducting costs for payroll advances, meals, tools, and uniforms. Also, funds may be forcibly withdrawn from paychecks because of court orders for student loans or child support. However, withholding money or pay because of punishment or anger toward an employee is not legal.
Invest in Proper Payroll Training
Processing payroll is complex. You need to fully understand the rules related to tax deductions for local, state, and federal authorities. For some states, this is incredibly difficult.
It is important to remember that employers may be considered personally liable for the tax deposits for payroll checks. This means you cannot use these funds for paying other things, like business expenses.
It is a good idea to keep this money in a different bank account from the typical operating funds for the business. Another option is to hire an outside bookkeeper or accountant to handle the payroll processing for you.
Handling Payroll for Your Company
When it comes to handling payroll for your company, there are many factors to consider. However, with the tips and information here, you are well on your way to ensuring you handle everything properly and legally. This is essential to ensure the long-term success of your business and your employee’s happiness and satisfaction in their position.