This is part two of our guide on “Good Payroll Practices for Small Business”. To read part 1, click here.
There are factors that small businesses owners must consider before choosing the payroll system to use in a firm. These factors include:
Budget: Budget indicates resources available for a business to spend. When employers have squeezed budget, a manual system may suffice. Software and outsourced payroll services may be expensive. Nevertheless, employers should mind the cost and time of payroll management . If the budget permits, employers should outsource or install the software.
The number of employees: The number of employers impacts the burden of payroll management. It is easier to manage payroll when employees in a business are few and vice versa. Thus, a manual system would be unfit for a firm with many employees. It would also take time to do it manually, even with few employees.
Confidence: Confidence in handling human resource functions and payroll management is crucial is a determining factor. If the human resources are confident, then manual can be of help. If the confidence is low, employers should consider outsourcing or using the software.
Enumerate Payroll Policies and Processes
Setting up a payroll system is not a guarantee that all is well. There is a need to set up standard procedures and payroll administration and management policies. The payroll policies help standardize how the payroll works, establishing a shared understanding between the perspective of employer and employee on payroll issues.
Install a Time-Tracking System
Time tracking is vital in a payroll system, especially for employees paid hourly. A time tracking system helps indicate when an employee reports and leaves the work. With inbuilt features, the system can calculate the total hours worked for each employee, which facilitates accuracy in payments.
Establish Cash Flow Tracking System
Cash flow is a crucial element for a business. Without a healthy cash flow, a business would run into a crisis. It is even worse for a business that runs out of cash during the wage payment period. A cash flow tracking system helps monitor cash flow to identify any issue disrupting an optimum level of cash flow in a business. A system makes it possible to ensure cash is always available to pay employees when most needed.
Recruit a Payroll Manager
As noted earlier, payroll management is not easy, especially when the business grows big. The best option is to hire skilled personnel to oversee the payroll administration. If it becomes expensive to maintain an internal payroll manager, businesses can opt for an outsourced expert who can report to the workplace when needed. Equally, skilled employees within the firm can be delegated the mandate of handling the payroll. And as a result, all payroll issues can be handled smoothly.
Maintain Worker and Payroll Records
Records are crucial in businesses for aiding future reference. Thus, payroll and employee records are crucial, requiring that employers always keep them intact and produce them when needed by government agencies. The law requires that these records be in place unless the time frame to dispose of them is due. For example, employers must not dispose of time cards for active employees before two years are over. Importantly, payroll information for wages must be preserved for at least three years. Business owners must understand all these requirements.
Undoubtedly, payroll administration is an undesirable task for every employer. However, these tips make it a bit easier to deal with payroll issues. Employers must increasingly invest in having the best payroll structures.