Whether your company is just launching or growing and adding new employees, keeping your payroll accurate and consistent is a key priority.
Here are some tips to keep the costs down, the productivity up, and the process humming.
1. Keep complete payroll records.
Start with the basic information from all employees, including Social Security numbers, number of deductions, benefits, overtime, bonuses and any other factors that impact their pay checks.
Create a single file using MS Excel or a payroll software system, and keep it up to date. Regularly remind employees to notify you of impending changes in their personal circumstances well in advance of when the changes will take effect.
2. Ask for help when you need it.
If you don't know if a payroll deduction is valid or accurate, talk to your bank relationship manager.
3. Work with an accountant to set up a payroll system.
CPAs, banks, and other number-crunchers can advise you on how to manage your payroll. If you have an accountant, arrange for some time to work out a system to streamline your payroll process by using software like QuickBooks or Peachtree.
4. Know the deadlines.
If your business is a corporation of any kind—a C corp, S corp, or LLC or some other corporate entity—ask your state tax agency for a list of forms and due dates, including everything from quarterly unemployment payments to taxes due on profits.
5. Get to know the functions of your payroll system.
There's a lot more to preparing payroll than counting up the hours your employees work. Payroll systems can help you track healthcare insurance contributions, 401K plans, wage garnishments and other factors. Find a system that's expandable to guide you through the maze of who gets what, and take some time to learn how to use it.
Most payroll software is designed for the uninitiated. It provides guidelines, alerts, warnings and other alarms that advise you when things don't add up. Make sure to check your figures to avoid problems for both your employees and your company.
6. Create a separate payroll account at your bank.
Talk to your bank about creating a separate account for payroll deposits, rather than mingling them with your operating cash. Include taxes, costs of benefits, Social Security, Medicare, and other payroll deductions in this separate account.
This is another way Atlantic Union Bank can be an invaluable partner. Your relationship manager can provide the facts, figures, rules and regulations for keeping company cash on hand to pay your staff and IRS and other tax agencies on time.
7. Evolve your payroll system as your company grows.
When your business has a couple of partners and a few employees, payroll is fairly simple. But if your plan is to grow, expanding your operations and adding more employees, you will have other needs.
Chances are, the system you start with won't provide the functionality you need as your business grows. At some point it will be wise to outsource your payroll functions, to eliminate the need for staff to prepare checks, make timely deposits to tax accounts and pay health-care premiums.
But first, talk to your banker about setting up a unified system that incorporates all of your business accounts and activities into a single, simple system. You will still do the books, but your bank can integrate your payroll account with your cash accounts, including insured money markets, CDs and other cash instruments.
8. Know the rules and play by them.
Consider taxing agencies as partners in your business. The IRS, state and local taxing agencies are happy to provide information on what they require. Contact these agencies for guidelines.
They'll help you understand their rules and regulations, and they offer workshops for small- business owners. Attend a workshop or two, take notes, ask questions and get a name to call when more questions come up.
9. Fix problems fast.
If you're notified by the IRS, the state tax commissioner or a local taxing agency that money is due, don't put off fixing the problem. Every day that passes costs your business money in interest and penalties.
10. Know what you don't know.
Unless you're a CPA or a business major, chances are you don't know what you don't know. Hire a CPA, an accountant or a payroll pro to get your books in order and your system in place.
Have a consultant clean up the books and create a system that you understand. It's worth spending a little money to tap the knowledge and experience of a real professional.
Work with the same consultant as your business grows and your payroll expands. Also, keep his or her telephone number on your speed dial for quick access to answers.
The Key to Success
Managing payroll involves a lot of moving parts—employees, tax agencies, investment managers, your bank. While that makes things a little confusing at times, it also means you have many resources available to help.
The most important thing is to not fall behind. The costs of late payments in business are steep: there is nothing worse for morale than having your paychecks bounce; missing a payment to creditors hurts your reputation and brings late fees; the IRS is never friendly about missed deadlines.
Use all the resources available to you to keep your payroll running smoothly, and know when to ask for help. Reach out when you're confused. When it comes to payroll, there are no stupid questions.
When in doubt, pick up the phone and call your Atlantic Union Bank relationship manager for advice.