When it comes to running a successful business, having the ability to pay your employees is critical. Since many small business owners don't come from an accounting background, preparing employee payroll can be a challenge.
Here are three tips that you can use to help streamline your small company's payroll preparation in the future.
1. Consider switching your employees to a salary.
If you want to eliminate a lot of the mistakes that can be made when preparing payroll for your employees, you should consider switching your workers from an hourly rate to a salary. Employees working on salary make a pre-determined amount of money each pay period, regardless of the number of hours worked.
By establishing a set amount for each employee, you will be able to quickly and easily prepare your payroll. The amount you pay out in wages and taxes will remain consistent, allowing you to make fewer mistakes. Employees may also benefit from switching to a salary because it will be easier for them to budget their income each month.
2. Consider switching to a monthly pay period.
Another simple tip that you can use to reduce the stress associated with payroll preparation is to switch all of your company's employees to a monthly pay period. By paying your employees once a month, you will reduce the number of times that you must prepare payroll throughout the course of a year.
The fewer times you process payroll, the fewer chances you have to make costly mistakes. Consider a monthly pay period if you want to streamline your company's payroll processing in the future.
3. Automate your state and federal taxes.
Withholding state and federal taxes from employee paychecks each pay period can seem like a daunting task. With tax codes changing regularly, it can be challenging for a small business owner to remain up-to-date on vital tax changes that can affect payroll.
Making the choice to automate your state and federal tax withholding with a reliable software program can help you eliminate mistakes when processing your company's payroll. These software programs automatically calculate tax amounts based on the employee's income, W-4 information, and current tax laws. Allowing the software program to deduct state and federal taxes from employee wages automatically helps to eliminate mathematical errors from your payroll preparation.
Streamlining your payroll preparation can help you eliminate costly mistakes and reduce the amount of time and energy required to pay your valued employees. Simplify your payroll process by switching to salaries, paying employees once per month, and automating your state and federal tax withholding.