Payroll can be a headache for any company. If you’re operating a small business, though, the challenge can be particularly difficult.
Out of necessity, employees at small- and medium-sized businesses (SMBs) have to wear multiple hats at the same time. This means that you — or the person managing your payroll — could be juggling a million priorities while trying to get payroll out the door.. They might be heading up your HR department, helping with sales, overseeing marketing, working on R&D or anything else.
This crossover of responsibilities (and lack of payroll expertise) can lead to costly payroll issues over time. From the shock of receiving a nasty letter from the IRS to the time and fines it can take to correct errors, payroll mistakes can really slow your team down.. If you’re dealing with this problem in your SMB — or you’re worried it could become a factor in the future — here are three ways you can get in front of it.
1. Use Technology to Streamline Your Payroll
Tech has touched every area of business. It has the ability to simplify tasks, enhance capabilities, and revolutionize how companies operate.
Nowhere is this more apparent than in the area of payroll. The hum-drum, time-consuming activity seems like the last place one would look for mind-blowing tech tools to make a difference. And yet, there are many ways, both great and small, that you can use tech solutions to smooth out your payroll efforts and avoid potential issues.
The first and most complete option is a comprehensive payroll solution. These providers offer complete payroll services in the form of a third-party software that can include:
- Basic payroll processing: This functionality takes care of activities like calculating gross and net pay, paying employees by check or direct deposit, and tracking withholdings and deductions.
- Reports and integration: The ability to monitor payroll expenses, access data, and integrate the payroll software with other areas of your company is key.
- Tax processing: Along with doling out take-home pay, you also need your payroll activities to process state and federal taxes.
- Employee control: Third-party apps can allow your employees to create accounts, manage their information, and at times even withdraw earned income as an advance without needing to request it from someone else within the company.
Any competent payroll software solution should be able to address all of these items within its system.
Even if you aren’t interested in going with a full-blown third-party solution, you can still utilize various aspects of technology within your payroll system. For instance, you could set up direct deposit to automate the payment process. This can reduce the possibility of errors and can ensure that your employees get their paychecks as quickly as possible.
Another feature to look for is time-tracking or scheduling capabilities to help you track your employee’s hours. This can provide an easy to access way for employees to show you how long they’ve worked.
It doesn’t matter if you go with individual tech tools or a more comprehensive payroll solution. In either case, using tech is one of the best ways to prevent issues from cropping up in your accounting department.
2. Stay Organized
Technology is a great way to offload your payroll services in the name of preventing issues. But regardless of the tech tools that you use, there’s another more human-oriented aspect of the payroll process that you have to address as well: organization.
Most SMBs lack an integrated back office where accounting can be gathered and addressed in the same space. Instead, employees burdened with multiple responsibilities try to fit payroll in amongst other, customer-facing activities. This can lead to a sense of sloppiness and confusion that makes errors and issues all too easy to occur.
One way to address this organizational issue is by consolidating your accounting information into a single program or tech stack. This is comparable to marketing, sales, and customer service reps utilizing a customer relationship management (CRM) tool to keep track of customer data.
With so much employee information coming through your system, it’s essential that you gather all of that data — including your payroll information — into one place. Choosing a quality accounting software can help you keep all of your payroll data organized in a predetermined and obvious location.
Another payroll organization hack has to do with your payment schedules. Modern workers tend to get paid in different ways. Some are reimbursed by the hour, others are paid per project, and still others receive a salary. With so many different payment cycles going, it can become hectic keeping track of everything.
Rather than allowing this to remain a potential spot for errors, do your best to sync up all of your payment cycles. Try to have monthly, biweekly, and weekly payments fall on the same days whenever possible.
3. Outsource Finances Entirely
You may find that organization and tech tools aren’t enough to avoid your recurring payroll service issues. If that’s the case, you may need to look into farming the task out to another entity.
By outsourcing your accounting and bookkeeping services, you can tap into several benefits. Outsourcing can:
- Save you time;
- Avoid mistakes;
- Help you conduct payroll more efficiently;
- Implement best practices;
- Avoid the headache and mental strain of overseeing another job function
While outsourcing SMB financial activities like payroll, bookkeeping, accounting, or invoicing will cost you money, removing stressors and freeing you and your team up to focus on other aspects of your business may be well worth any expense.
There are many responsibilities that come with running a small business. Regardless of how much help you choose to seek, there’s a good chance there’s a more effective and accurate way to get the job done. So, try utilizing some of the tech tools that you have available. And if you find that you still can’t handle the pressure, look for a third-party solution that you can trust to outsource your payroll in its entirety.
Your small business will operate more smoothly, and everyone will get a lot more done.
Laila Azzahra is a professional writer and blogger that loves to write about technology, business, entertainment, science, and health.