Learn more about the payroll process and how to efficiently approach this in our how to do payroll guide. For state-specific payroll process information, check out our state directory and click on the state you want to learn more about. Here are 27 of the best payroll tips to keep in mind, broken down into the segments of the payroll process for efficient management. It is important to also pay close attention to whether your employee is exempt or non-exempt from receiving overtime pay (see step three). For non-exempt employees, payroll administrators must also ensure they are separating regular work hours from overtime hours. In addition, if your state requires individuals to pay state taxes, ask your employees to fill out any relevant state tax withholding forms.
Everyone should use the same procedures and processes to make payroll as effective as possible. This is where you do all of the payroll calculations on your own and then submit any direct deposits or print any checks all by yourself. You’ll need to keep your own records and find a system for calculating every single payroll payment.
- These forms summarize each individual’s earnings and tax deductions for the year and need to be sent out by Jan. 31.
- Accuracy, standardization, backup systems, and other requirements can be overlooked and possibly trigger a time-consuming audit.
- By following these tips, you’ll be able to streamline your payroll process and become more efficient.
- We advise that it’s best to keep all your employees to the same pay frequency – i.e monthly, or weekly.
- This means that it is essential that you have an effective payroll management system in place, and you understand your obligations as an employer.
Documenting your payroll process is an important step in managing payroll. This strategy helps when analyzing and auditing your payroll system as it highlights each step and makes it easier to identify weak points in the process. Once you develop a payroll process that works best for your business, document these procedures and share them with the payroll team to help ensure each payroll staff member understands their role. Cloud-based systems can also integrate with other business software, providing a more cohesive view of your business operations. This can be particularly beneficial in today’s remote work environment, where you may be managing payroll for employees spread across different locations. By leveraging the cloud, you can make your payroll process more efficient, flexible, and resilient.
Your people-first HR software
While trying to hire enough employees in-house to handle payroll would probably be more expensive, payroll services can take a sizable bite out of your budget. Payroll is the process used to pay an employee, while a salary is the amount what is the journal entry for discount received of gross pay an employee receives per year. To check the status of their 2023 income tax refund within 24 hours of e-filing. Refund information is normally available after four weeks for taxpayers that filed a paper return.
Payroll software is probably the first place your mind goes when thinking for a quick way to streamline the payroll process, and for good reason. Most software systems are easy to use, cost-effective, and free up time and energy for your business to do what it does best. Big businesses have entire payroll teams or can outsource the whole process — not so with their leaner counterparts. Establish whatever payroll process works best for you, but always have a second pair of eyes to watch data entry.
QuickBooks Payroll
However, depending on your workforce, or the size of your business, you might choose to offer staff a different schedule, such as weekly or biweekly pay. Make sure you have clear oversight of the data, how it’s changed over time, and add these numbers alongside other financial targets. As one of the biggest expense areas for any business, running the numbers on payroll can help you strategically plan your business. People are one of the biggest expenses for any business, so you should be running reports that can spot trends and project where you’re going in the future. Payroll doesn’t just affect the transfer of money for wages, it might mean that you’re obliged by law to make pension contributions or similar.
What If the Employee Doesn’t Report Tip Income to Me?
Employees are required to keep a daily tip record and report these tips to you on a regular basis if they’re $20 or more a month. The IRS requires reporting by the tenth day of the following month. You probably have a policy about how these tips are split if you have such a situation in your business. Once you’ve designed a clear and transparent policy, make sure all your employees have access to it. It’s also important to update it on a regular basis in line with any changes to the law.
Regularly review and update your payroll budget throughout the year as well. This allows you to stay on top of changes and make necessary adjustments, ensuring your business remains financially stable. The first few payrolls will likely be the most difficult as you walk through the process and get used to what you need to do. It may be helpful to consult with a tax professional or accountant to make sure that you are checking everything in the process.
Types of payroll accounting entries
Communicate the benefits of direct deposit to your employees—it’s convenient, they get their pay faster, and it’s more secure. Implementing this change cannot only streamline your payroll process but also improve employee satisfaction. Look into our roundups of the best employee scheduling and best time tracking software for some options.
Payroll Tips & Tricks Every Small Businesses Should Know
Learn more about it in our in-depth Gusto review or visit Gusto to try it out today. Once you’ve withheld payments to cover employees’ taxes, unemployment insurance, health insurance and other benefits programs, you must remit those payments to the appropriate agencies. For exempt employees who are salaried, begin with their yearly salary and divide it by the number of pay periods in the year to find their gross pay per pay period. To learn whether you should classify a worker as a contractor or employer, read our W2 vs 1099 guide.
Or would you prefer to outsource it to an accountant or online payroll service? Don’t forget to document your policies so everything is publicly available and can be communicated to your employees transparently. The other key difference is that many small businesses choose to pay their employees on an hourly basis. And since hourly payroll is different from salary payroll, it requires different processes and tools.