Are you one of the business owners who want to do payroll themselves? Many business owners prefer to do payroll themselves to save costs, but it can cost them in time and effort. About 28% of these businesses spend at least 6 hours a month on payroll.
There are a number of reasons why payroll can take a long time, from the lack of organization to the sheer number of employees.
Read on to learn how to do payroll more efficiently to cut down on your time and costs.
1. Have a Payroll System
You don’t need to have expensive software to have a system. What you do need is organization. That starts by having a set date and time to do payroll. Ideally, you want to make payroll every other week.
Your employees will get paid often enough and you don’t have to schedule time every week to pay your employees.
You should have a set date and time when employees have to turn in time sheets and expense reports. You don’t want to have to repeat tasks because employees didn’t get information turned in on time.
2. Keep Great Records
It’s your job to maintain your business records. That comes with the territory of being a business owner. You have to maintain copies of payroll records and W-2 forms for each employee.
That’s in case you ever get audited or an employee files a complaint with the federal or state labor board. Having organized records will protect your business from fines or penalties.
What should you keep and how long should you keep them? You need to have information with each employee’s name, address, and social security number. You also have to have records that show when they worked, their rate of pay, and how much they were paid.
Finally, you have to have documentation that shows how much you took out in taxes, which will be necessary if your payroll taxes ever come into question.
It’s a good idea to hang onto these records for at least four years.
3. Automate as Much as Possible
One of the biggest challenges of managing payroll is calculating state and federal taxes. You’re probably aware that you have to take out certain percentages for Social Security and Medicare.
When it comes to calculating income taxes, there are a number of different factors that go into income tax with holdings.
The only way to do payroll and not drive yourself crazy is to find a program like a paystub creator that can calculate state and federal taxes for you.
The alternative is to memorize the different tax brackets and tax filing statuses. You might want to skip this since you already have enough to think about.
How to Do Payroll Efficiently
Time is of the essence in business. You have to make every minute count, which is why you have to know how to do payroll efficiently.
It comes down to being organized and having a system. When you’re organized and you automate as much as possible, you cut down on errors and you do payroll much faster than before.
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