Let’s begin by identifying the 4 most common payroll challenges that cause business owners stress, such as Cash Flow, Managing Payroll Taxes, Timely Payroll Submission, & Tracking Employees Hours.
As a business owner, “making payroll” (having enough cash on hand), becomes one the biggest stresses. One of my mentors, who eventually built a company that employed thousands of employees, told me about the lean years when he and his brother had no idea how they were going to cover payroll for the week. They never missed a payday over his 40+ year career and it was one of his proudest memories as a business owner that he never let his employees down. Some of the tips that he provided to me are as follows…
Let’s look first at Cash Flow, managing it intelligently will help you be like my mentor and never miss a check-date for your employees. Set-up a dedicated bank account (your payroll account), where you have enough cash to cover your payroll including taxes. Talk to your business banker regarding a line of credit which will serve as your over-draft “safety net” and ensure that you don’t get to NSF (payroll/banking term from Non-Sufficient Funds).
Believe it or not, many employers still “attempt” to manage the filing of their own Payroll Taxes...they think iit helps their Cash Flow position and would rather hold onto their money versus having it pulled with their employee’s pay. Although the IRS has made it easier to file through the EFTPS (Electronic Federal Tax Payment System), it is simply not worth the angst and added stress, please let the experts handle this for you and by experts, I mean a quality payroll company, not your bookkeeper or your CPA.
I can’t tell you how many times people have told me, “you need to make sure that your employees get paid on time, especially if you are a start-up”. The founder may not be getting paid every other week but that does not mean the rest of the employees don’t want to get paid…Establish your Payroll Schedule….time is never on our side, especially when it comes to processing your payroll. Your main objective is to build your business and payroll day sneaks up on you. Most payroll companies will want new companies to submit their payroll at least 2 days prior to check the date. If you have a fairly simple payroll, you have your dedicated bank account and your credit line, then go ahead set up your payroll as Auto-Pay. If your payroll is more complicated, set-up a recurring calendar event 2 days prior check date, make sure you have your user-name and password stored safely, yet accessible, for when you happen to be traveling. Lastly, have a backup plan. Add your bookkeeper as a user to your account in the event that you can have them submit payroll on your behalf.
Tracking Employees Hours is by far the most time-consuming component of payroll, especially for the employers who have a large hourly & seasonal workforce. Electronic Time-Cards and an integrated Time Labor Management system will significantly reduce time spent entering and/or importing hours into the payroll system. Your employees will be punching in and out at their computer, mobile app, and/or time clock. The employee’s time will be captured on their electronic time-sheet for the said pay period and will automatically pull into the payroll queue, all ready to go awaiting managerial approval. Once the electronic timesheets are approved, the pay period has been closed, you will be able to run the payroll. Do yourself a big favor and get rid of paper time-sheets and/or manually tracking time, there is no need to do it anymore because the cost of an Integrated Payroll & Time system is not expensive and worth every penny.
Paul Aemisegeo is the Founder & CEO of PayrollMart. He works with Employers & Entrepreneurs to help them with all things pertaining to their employees, specifically in the areas of Payroll, Employee Benefits, Workers Compensation and Retirement Plans.