Whether your company does payroll processing internally or on behalf of third parties, here are some strategies on how to save money on payroll processing. On the surface, payroll processing seems very simple, especially with the payroll processing software that does the math for you. But paying your workforce and even yourself is much more complicated than writing checks. Payroll processing takes time and for small business owners, time is money.
Strategies to Save Money on Payroll Processing
Not verifying the demographics of employees can be one of the most expensive mistakes that business owners make, and it is also one of the easiest to avoid. Make sure all W-2 or 1099 data is accurate and complete before filing it with the state and federal tax agencies, and make sure the information is updated every year.
The Use of direct deposit
Encouraging employees to use direct deposit is another money-saving strategy, and it is not difficult either. Direct deposit reduces stress, checks fraud and the loss of checks. When you use direct deposit, there is no having to cancel payments or reprint checks which can significantly be cost savings for employers.
Avoid all penalties
Processing payroll has so many components: tax payments, deductions from Social Security, contractor designations vs employees etc., which can trip small business owners and result in substantial fines. Many employers choose to outsource payroll processing services. The experience of processors is particularly valuable for companies with multiple office locations. A payroll provider can help you navigate, review and monitor the state’s specific legal requirements, especially for small businesses that can operate in more than one state. More explained here: http://www.multilinkconsulting.com/entrepreneurs-find-hiring-a-payroll-service-brings-perks/
It is tempting to think that the best way to save money on payroll processing is to do it yourself. To find out work with your accountant to determine exactly what services you will need to process the payroll correctly and how long it will take to run the payroll. Then, consider the stress of doing it when you try to build and manage your own business. It does not matter if you employ one or thousands, the business owner must ensure that the payroll is managed accurately and on time. There are many rules and regulations and variations to the rules to learn and keep up as a small business owner. This means just one more thing to do in the middle of a long list of responsibilities.
Investigate outsourcing opportunities
Several regional and national companies specialize in payroll processing, and many banks offer payroll support to business account holders. You can even find small accountants and payroll companies in your community. Vet all possible outsourcing opportunities to ensure that processors have a strong track record as well as the responsibilities and other current protections.
If you think you might want to outsource, use the payroll task inventory to compare the costs of each provider. Select a processor that agrees to block your basic payroll processing costs per employee for at least a year or more. This helps to project expenses and negotiate rates. Also, make sure all potential costs are disclosed in advance so you do not get surprised when you request a new report or service that was not part of your original service package. These steps will help you maintain your payroll costs over time so you can plan and budget better to remain profitable.
Before discovering how to save money in payroll processing, describe your specific needs using the aforementioned checklist, your accountant can help you make sure you have not forgotten anything. Saving money on payroll processing requires a small initial effort on your part, but the return on that investment can be significant.