Understanding Payroll And What It Entails For Your Company
Your payroll function is the management of all your payroll operations such as remitting taxes, storing required documents, making entries, recording transactions, expenses, making payments and check processing, employee compensation and benefits, insurance, and several related accounting tasks, and a lot more. Managing it for your small business can be a little taxing. But this is where you need to understand it a little deeper.
- Know Your Deadlines
For any business regardless of its size, the first thing that they should understand is the accounting deadlines. If you are not prepared yet to file your company’s income tax and payroll, you already know that you are not meeting your deadlines. For income taxes, you can always file an extension. But this is not the case with W-2s at all. This may lead to a penalty by the IRS. This is exactly why you need to be aware of your deadlines.
- Categorizing Your Employees
How much attention do you pay to categorize your employees? Your small business has a few employee categories but then the fact that they are few in number leads you to become a little careless at times. You must be aware of all your employees and associates and categorize them correctly if you want to optimize your payroll function. Things are going to be different for your minimum wage employees as compared to how they will be for your independent contractors. Likewise, your partners and senior associates will be treated differently as compared to your regular staff members.
- Can You Automate Your Payroll?
Is it possible to automate your payroll function? It might just be given the current state of technology. Your current payroll system is riddled with a lot of problems and you are already aware of that. You have seen how some of your assistants end up making very crucial mistakes. It is just a job of recording numbers, right? Wrong! If payroll management was that easy, you wouldn’t have so many options at your disposal.
- You have outsourcing companies that handle this function for you
- You have payroll software platforms as well that simplify your business operations tremendously
- You have various computerized platforms and cloud-based solutions that are least likely to make any errors at all
So yes, if you can find a way to automate your payroll function, you should do it right away.
- Taxation, Health, And Retirement Payments
Your taxes, your health, and your retirement payments also form a critical component of your payroll function. If you have employed payroll software, you are already making automated withdrawals from your bank account for every payroll cycle. Regardless of that, it is important for you to check whether your tax payments and other contributions actually reach the IRS or not. You have to consider the state tax authority and other third parties as well. If you remit taxes in more than one state, you will need a separate state tax ID for each one of those states.
Finally…
Managing your payroll can get a little complicated if you are not keeping yourself updated with the latest changes. In the end, it is very crucial for you as a business owner to always comply with labor and employment laws. This is going to help you in your payroll function a lot.