Handling payroll is a major chore for most small businesses. Read on to learn a few simple tips to help you manage payroll simply and efficiently.
Within their first five years of operation, approximately half of all small business will fail.
There are many reasons that small businesses fail. But, for many of them, the issue is a combination of a lack of cash flow and poor money management.
If you’ve recently opened a business and don’t want to be part of the 50 percent that fails, it’s essential that you get a handle on your finances. This includes managing your payroll effectively.
Not sure how to go about this? Can’t afford a bookkeeper to handle payroll for you? Keep reading.
Listed below are five tips that will help you manage payroll more easily.
- Choose the Right Payroll Software
In the beginning, it may be tempting to do everything yourself to keep expenses as low as possible. There are benefits to this, of course, but it also leads to a larger margin of error.
To avoid mistakes and maximize your revenue, consider investing in payroll software. Many of these programs are highly affordable and will do the heavy lifting for you.
Look for a program that is hosted on the cloud and automates state and federal taxes for you.
- Keep Your Documents Organized
A lack of organization is going to make the payroll management process much harder than it has to be.
Hang on to important documents — this includes things like W2 and W4 forms, tax deposits, and records of vacation time.
Keep these documents neatly sorted in a binder or filing cabinet so you can easily find them later.
- Set a Budget for Wages and Taxes
When you’re planning out the payroll for your business, be sure to factor in both wages and taxes.
As an employer, you are required to pay Medicare and Social Security taxes. You’ll also likely need to pay unemployment taxes.
Factor these in ahead of time so you’re not penalized.
- Know Which Costs Can be Written Off
You can actually write off a number of your payroll costs. Some common ones that can be written off include:
- Wages that qualify as necessary business expenses or startup costs)
- Employer contributions to Medicare, unemployment, and Social Security
- Commissions and bonuses that qualify as additional wages
- Cash awards
- Benefit programs (life insurance, health plans, etc.)
- Pain sick days and vacation days
- Travel reimbursements
- Contract labor that is valued over $600
Don’t forget about these potential write-offs. They can help you save a lot of money on your tax bill.
- Use a Paystub Generator
Finally, look for an online template or paystub maker to simplify the record-keeping process.
There are lots of reliable paystub generators that make it easy for you to keep track of your employees’ income and the amount of cash going in and out of your business.
Many of these generators also store your data, so you can always return to them later on if you have questions or notice a payroll issue.
Looking for More Tips to Manage Payroll?
Payroll management can certainly be a challenge, especially if you’re a new business owner.
But, if you put these five tips into practice, you’ll have likely have a much easier time trying to manage payroll for your small business.
Are you interested in learning more payroll management strategies? Do you just want to know how to better manage your business’s finances in general?
Whatever information you’re looking for, we’ve got it in the finance section of our site. Check it out today for a variety of helpful money management resources.