There are not many people in business who enjoy payroll processing. It is complicated and time consuming plus in some situations it can also be stressful, i.e. when cash flow is tight. The key to handling payroll in your business, however, is to manage it carefully. Here are some tips:
Organisation is crucial to effectively managing payroll. You will have different deadlines to meet for everything from making payments to employees to filing with the Revenue. Proper planning is therefore essential, plus you need a system that helps you manage the process.
A further point on deadlines – you should plan well in advance and know when the big deadlines will come. Proper planning will result in fewer shocks to your business as you can put in place whatever is needed to meet your obligations. Pay particular attention to holiday periods and other times of the year that put a strain on your cash flow.
Automate as much of the process as possible by using software or an application. This can be cloud based or one you have installed on your computer. Automating payroll as much as possible will help you meet deadlines and it will reduce the number of errors, particularly calculation errors.
Details are incredibly important when managing payroll, so don’t skimp on them or try to cut corners. This means ensuring things like your employees’ dates of birth, address information, and start dates are all entered on your payroll system promptly. They should also be kept up to date.
Payroll is complex at the best of times, so you shouldn’t make things more difficult by having procedures or policies that add to that complication. You will probably need to speak to your accountant and HR manager/provider to discuss if and how anything can be made simpler, but it will be worth it in the long term.
Legislation and rules around payroll change regularly, so you should make sure you are aware of how they affect your business. Some things to look out for include maternity pay, paternity pay, tax rules, benefit entitlements, holidays, rules around expenses, and more.
Payroll is likely to be a significant cost to your business – in many businesses it is the largest expense. It is therefore essential to manage your cash flow carefully so that you always have what is required to complete payments whenever they are due. This involves having good policies and procedures in other areas of your business, including accounting and credit control.
You should also explore the possibility of outsourcing payroll to a specialist. You get the benefit of someone else taking on the headache of processing what’s required and staying on top of deadlines. When looking at this you should consider the time and resources that you will save by outsourcing and weigh that up against the cost. Factor in things like staying on top of legislation, or correcting mistakes, when calculating the time, you currently spend.
For help or advice with payroll in your business, or for any other business or accounting help you need, please contact a member of the Gilroy Gannon team today.