Managing payroll and keeping the payroll best practices working well is one of the biggest tasks for a business, no matter how many people you have in your team. Even the organizations with a small number of employees on board struggle with the paperwork and deadlines.
Things can get even harder for growing companies that plan to scale and extend their teams over time. As you onboard more people, things are likely to get complicated. Moreover, the current systems may not be equipped to handle the growing workload.
Simplifying the payroll process will help. You should also ensure that it is capable of scaling with the evolving needs of your organization. Careful planning and proper tools can keep you on the safe side by ensuring that paychecks come on time, without errors, and with the assurance of compliance. Additionally, implementing some payroll best practices is vital for growing businesses. Here are the ones that you should follow to cover all fronts.
Main Recommended Payroll Best Practices
Below you will see some of the main payroll best practices usually recommended.
Keep track of dates and deadlines
When you juggle a lot as a business owner, it is easy to get complacent about important dates and deadlines. It is a good idea to write them so that you never miss the submission dates.
Missing deadlines can lead to unnecessary expenses like fees, penalties, or interest payments, which is the last thing you would want to happen. Outsourcing payroll management is a smart idea if you wish to focus on business growth without worrying about missing deadlines.
Classify employee correctly
Classifying your employees correctly is vital if you want to stay on the right track with your tax forms. You need to segregate full-time employees from part-time employees, volunteers, independent contractors, seasonal employees, and interns to file because they are treated differently from the payroll tax perspectives.
It is best to let an expert handle the function if you are not sure about this classification because it is vital for keeping your business legally compliant. It matters all the more for growing businesses as you will be hiring more people over time, and classification can get tricky as you create new roles.
Use electronic pay statements
Electronic pay statements make an ideal pick for a growing business with an expanding team. Even if you are doing well enough with a paper-based system, it makes sense to automate payroll administration once the business expansion is on the cards. An online system simplifies the repetitive processes, while employees also appreciate the hassle-free digital experience.
Your HR team can focus on growth-critical tasks rather than struggle with the mundane payroll functions. It helps you save time and effort, which makes it a win-win choice for businesses.
Have a consistent payroll policy in place
A clear and consistent payroll policy is an asset for any business, and it is all the more vital when you have plans to scale up. Reviewing and signing the payroll policy form should be a part of the onboarding process for new recruits so that there are no confusions and disputes later.
Follow a consistent plan for everyone, whether new employees and those who have been with you from the start. Clarity, consistency, and transparency foster trust and breed employee loyalty, and they matter a lot for growing organizations.
Create a payroll communication plan
Just having a consistent policy is only half the work done because you need to make sure that everyone knows it as well. Another best practice that you cannot miss out on is creating a payroll communication plan that ensures a clear understanding of the employees’ pay structure. The objective is to prevent any unclear agreements, miscommunication, or errors so that workers have clear expectations about their net pay.
The onboarding package should clearly mention details such as the payment schedule, vacation accrual, and benefits.
Keep your records tidy
Without any doubt, tidy and well-maintained payroll records are advantageous for any business, more so for the ones that are scaling. It ensures that the entire historical records are easily accessible whenever you need them. You will probably have to access them often as the team size grows.
The best part is that you can digitize them and steer clear of loads of paperwork and files. You can use a cloud-based record system to collect and store data and access it quickly, right when you need it. Well-kept records also keep your business ahead on the compliance front.
Audit the system regularly
As your business grows, you cannot afford to get complacent about payroll because taking things for granted can land you in trouble. The idea is to tune up systems so that they align well with the evolving needs.
Apart from following these best practices for payroll management, you also need to schedule regular payroll audits to ensure that the system is doing well enough. Audits also make it easy to pick what is working and what is not. Once you know the strengths and weaknesses, it becomes easy to explore solutions to enhance the system according to the business’s needs.
Stay compliant with payroll laws
Compliance with your state’s labor laws keeps your business on the right side of the law. Although it gets challenging when you bring in more employees with different classifications and benefits, you cannot afford to go slack with them. Look for a reliable payroll solution that covers your business on payroll preparation and compliance fronts. The investment is worthwhile as it curbs the risk of expensive legal penalties that you may encounter if you fail to stay on track with compliance.
Managing payroll for a growing team requires a strong grasp of these best practices’ systems and implementation. As a rule, good preparation and strong organization keep you on track with smooth payroll processing and error-free filing at the end of the financial year. Investing in modern payroll software is the smartest decision, even if you are still small and have expansion plans ahead. It can keep your system on track in the present and ensure that it can deal with future growth challenges.