Managing payroll for a small business can be challenging. From tracking time and tax payments to processing employees’ salaries, each step of the entire payroll process requires utmost attention to detail.
Unlike large organisations, small businesses may not have the capital to purchase a robust payroll software or hire resources to form a dedicated payroll team. That said, payroll need not necessarily be a tedious and time-consuming task for small businesses.
Here are some ways in which small businesses can manage payroll easily, more accurately and effectively.
Plan a payroll schedule
Payroll frequency and salary disbursement dates are two key decisions that business owners need to make. This includes deciding whether employees should be paid on a weekly, bi-weekly or monthly basis and the exact date in which salaries will be disbursed to employees. Regardless of the pay frequency and salary payment date, it needs to be consistent and employees must be paid on time.
Once these key decisions are made, it becomes easier to work out the amount of time to process payroll in order to meet these key payroll dates. The HR team can also work out the payroll schedule for the year to ensure that everyone will not lose track of the next payday.
Automate complex payroll processes
Automating complex payroll processes goes beyond just converting all processes into a software or using an Excel macro. Instead, payroll teams should analyse and identify payroll processes that are the most taxing, most complicated, or most prone to errors. This may include tax payments or submitting mandatory employee contributions.
There are various payroll providers today that help small businesses manage a part of their payroll processes, instead of the end-to-end payroll processing. Business owners and the payroll team can decide on an arrangement that best fits the business’ needs. However, it is always best to pilot the process for a few months to ensure that it helps to streamline the overall payroll process in the long run.
Invest in a payroll manager
Payroll can be a very complicated task, particularly if the business is keen to expand in the long run. Hence, it may be wise to hire a professional and experienced payroll manager. While the payroll manager is not expected to be executing the entire payroll operations, he or she is accountable for being the final gatekeeper when it comes to all payroll-related matters – be it approving the final payroll reports, identifying payroll calculation anomalies, or ensuring accurate and timely processing of payroll updates.
Ensure double duty on employee and payroll entries
Retaining and storing employee and payroll records is mandatory across most countries, though the duration of keeping these records may vary from country to country. Small businesses should implement a proper record keeping process and have a second pair of eyes to check on the data entry. After all, the extra zero can result in endless headaches down the line for the payroll team.
Enter and run the numbers twice over to minimise potential data entry errors. It is always best to have more eyes on the data and set aside time to review the month’s payroll records or new employee record entry.
Understand and abide by local salary regulations
Having the best payroll software or clear payroll processes would be all for naught if employees who are managing payroll themselves are unfamiliar with the local salary regulations. Invest time to train payroll employees or send them for external training to keep them abreast of the latest salary legislations or any ongoing changes. A well-trained payroll team can ensure team cohesion, communicate effectively to employees on payroll-related matters, effectively manage workload and cover each other duties should a team member goes on leave.
Paying employees timely and accurate is essential for any business, as it is a key factor in keeping employees motivated and engaged. However, this can only be possible if the business’ payroll processes are well-managed and robust. The above handy tips are a good way to help small businesses get started on paying employees easily, accurately and more streamlined than before.