Payroll involves not only paying an employee the correct amount of payment at the correct time as mentioned in the signed contract, but it also includes various other factors like hiring, firing, leaves dates, salaries and tax-related accounting. If you own a small business, be it in Perth or anywhere else in Australia, you will find payroll to be one of the most time-consuming and tedious business activities. But, you have to get it done because it is necessary to keep the employee morale high, increase company resources and for the overall success of the business.
How should you manage payroll records for your business?
Managing payroll records is indeed a tiresome job. But, just as every problem has a solution, you can follow some tips here to make it easier.
1. Register for an EIN
EIN stands for Employer Identification Number. Before you put an employee on the payroll, you will need an EIN. Social Security Number (SSN) is an identification number for you as a person, and similarly, EIN will be also used as an identification number for your small business for tax-related accounting. As an owner of a small business, you must keep in mind that, for most small businesses, owners need to get an EIN before applying for licenses, filing payroll taxes or even opening a bank account.
2. Make a decision on pay schedule and salary status
These are the two important factors that you have to decide on as a small business owner. Pay schedule, also termed as pay frequency, is the time of your payment and frequency. Most of the pay schedules include weekly, bi-weekly as well as monthly payments. Salary status is the process of wage computation. You may make hourly pay for non-exempt employees and pay salaries for exempt employees. Just check the Australian government laws if you are based in Perth.
3. Follow the wage laws
As an employer and business owner, you must understand all the legal and financial obligations. You must pay all the different kinds of taxes at right time, be very sure that all your employees get accurate payments on the correct schedule and monitor your payroll tax deposits to ensure that they maintain the schedule that meets your tax liabilities.
4. Set up a definite payroll system
A payroll system will help you calculate and manage employees’ paychecks. You will generally have three options for a payroll system. You can make it ‘manual’, where you can save a substantial amount of costs. But manual payroll system can be very time-consuming and tiring and also prone to errors. You can make an ‘outsourced’ payroll system too, where you can hire someone to handle the payroll activities like processing paychecks, handling tax deposits and different taxes. But the most effective system which is mostly used in the business world now, in this era of digitalization, is the ‘software’ payroll system. It is time-conserving as well as offers high efficiency.
However, before setting the payroll system, you must consider some factors. First of all, think about your budget. How much you can invest in a payroll? If you have a small budget, you cannot easily hire an outsourced payroll specialist. At the same time, you have to keep in mind the time factor. Then comes the number of employees. Fewer the employees, less complicated will be the payroll. And lastly, you have to see whether you can handle the payroll activities yourself or not. Having background knowledge of accounting or HR is an added advantage but what you need here is confidence. If you have that, then go for it. Otherwise, you may search for expert bookkeepers in Perth.
5. Outline your payroll policy and the processes
Without a standardized policy, you cannot carry out a major procedure. So, before you run your first payroll, you have to draw an outline of payroll policy standards. The policy will give every one of your business a clear idea about the working policy of payroll, payroll period, how much they can be paid and the benefits.
6. Keep a time-tracker
Do you pay your employees at hourly rates? Then, it is highly recommended to use a time-tracking system to manage the productivity of the employers and calculate their wages. But remember, you should keep such a time-tracking system that is easy to handle but cannot be easily manipulated.
7. Maintain a check on your cash flow
As a business owner and a responsible employer, you will definitely not want your business to run out of cash flow. It will not only affect your employees’ salary but other factors too. So, if you can keep track of the cash flow of your business, you can easily detect the root of the problem if such an unwanted situation arises at any time.
If you keep monitoring your cash flow, it will definitely help you to spot possible payroll problems that may include overstaffing or overpaying. If you’re going through a financially difficult period, you can negotiate for a vendor payment or make a delay in collecting outstanding customer payments.
8. Make an investment in a payroll manager
As said many times earlier in this article, payroll is a tedious and complicated job. If your small business has the financial strength to keep a professional payroll manager, then you shouldn’t waste any more time. As a business owner, you have to deal with a variety of engagements, right? So then, why will you invest more time in payroll, too? Well, if you don’t have enough budgets to keep such a professional, you can look for any freelancer, or you may handover the job to the most trusted as well as a skilled employee of yours.
9. Maintain employee and payroll records
Last but not the least, you should maintain all the records of the employees and payroll processes. First, check out the government rules and regulations regarding disposal and duration of records so that you can maintain legal obligations properly.
Managing payroll for a business is indeed a tough job. For your business in Perth, you can look for the available options for important payroll services Perth. Internet is a valuable source for that.