Payroll can be an extremely difficult task for virtually any organization but with the proper resources, it becomes routine and relatively easy. The key to any payroll system’s success is paying employees in a timely and appropriate fashion, which is made possible by following a few simple payroll tips. Payroll administration can be extremely time consuming, so it is vital that any organization follow best payroll practices to save both time and money. There are several best practices for payroll administration that you can follow to maintain your staff and yourself happy.
One of the most common payroll tips is that small businesses should pay their employees accurately. Whether they are paid via a regular wage scale or by commission, employees deserve to know their pay accurately and in full. Payroll services and tax preparation should be completed in a timely manner, as well. If employees do not receive their pay, this can significantly affect their financial wellbeing and may cost the company money in the long run.
Payroll is an extremely important function, which affects every aspect of a small business’s operation, but the mechanics of payroll may be the most overlooked aspect of keeping the lights on in the business place. Payroll services and taxes should always be completed and submitted on time. However, small business owners may be tempted to cut corners when it comes to payroll, resulting in late submissions and delayed payments. To ensure you avoid these types of scenarios and to properly administer and manage payroll, small businesses should always seek out and retain the services of a payroll service provider.
Although taxes are something most small businesses are required to pay on a monthly basis, most fail to realize that they can also be fined for late filing. It is recommended that all employees receive an informational electronic filing package from their payroll service. Electronic filing allows you to electronically file your taxes with your federal, state, or local governments. Payroll tips for small businesses include preparing and filing your taxes on time to avoid the penalty.
Another area that many small businesses fail to consider when preparing and managing payroll is the use of an employee identification number (EIN). The EIN is a 12 digit number assigned by the U.S. government to each individual who receives income tax benefits. By law, employees must display their social security number when submitting their taxes with the IRS. This includes self-employed individuals. If a small business owner fails to ensure their employees have and display their EIN, the business may be subjected to a substantial fine.
The IRS states that any tax-free allowance received by an individual is taxable income. This includes taxes earned through payroll services. Tax payments are typically delayed until the employee’s next pay period, which could cause a tax burden for an business that has not been prepared in accordance with IRS requirements. Businesses should take time when preparing payroll, including collecting necessary information from their employees regarding income tax. Employees should be provided assistance with their taxes, such as using the correct tax preparation software, avoiding common errors, and making sure all required deductions are taken.