You are here: HomeResourcesS1Payroll BlogQuick Tips For Outsourcing Payroll

1. Perform Continual Audits

2. Involve Your Employees

3. Integrate with Technology that Improves Efficiency

4. Stay Current on Tax Policies

5. Outsource Your Payroll

 

1. Perform Continual Audits
The best way to identify payroll issues is to perform regularly audits to help identify areas that need improvements, allowing you to determine a solution.  Start, by creating a workflow analysis and itemize each step of the process from beginning to end.  Review all paperwork to make sure everything matches up.  Is the new employee classified correctly to avoid the wrong tax status?  How are you adjusting pay for employees after a raise or bonus? 

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2. Involve Your Employees
Payroll policies should be clear and simple.  If policies are complex, they need to be accurately defined or confusion occurs and mistakes are made.  Frequent communication with employees can help identify and clarify common areas of misunderstanding such as vacation, sick time, commissions, expense reimbursements, overtime, and even social media. 

Make policies accessible to employees for quick reference and allow for input.  Simply asking employees what works and what needs improvement is the perfect place to start. Inviting input from employees, to assist in the payroll process helps to empower, and encourages support for programs implemented.  

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3. Integrate with Technology that Improves Efficiency
A small businesses can gain better efficiencies by integrating their payroll process with other tools by leveraging available technology.  For example, a cloud-based, online time reporting systems allow employers to track employee’s hours, and download the data directly into the payroll program, eliminating messy time sheets and minimizing entry errors.  Employees can clock in and out from a web browser or mobile phone, and the employer can see in real-time who is working and generate detailed, up-to-date reports.

Another benefit to the online time reporting system is to combat employee time fraud.  Employers can add a biometrical component to the online time reporting systems, such as scanning ones finger to help ensure identity and reduce payroll fraud.  According to the Association of Certified Fraud Examiners, Payroll fraud is the #1 source of accounting fraud and employee theft, and it happens to 27% of all businesses. That’s nearly one in three. 

Lastly, an employer can offer direct deposit to employees.  Employees enjoy the convenience of having their paycheck go directly into one or more accounts and save them a trip to the bank.  For employers, direct deposit helps eliminate time spent reconciling individual payroll checks, re-issuing of checks due to lost or stolen checks, and stop payment charges from the bank.

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4. Stay Current on Tax Policies
The ever changing tax rules and government regulations make it easy for mistakes to happen, especially in small businesses that lack depth in personnel.  The IRS reports that 1 in 3 employers has been charged for a payroll mistake.  Penalties for mistakes can grossly impact your bottom line.

To avoid penalties and remain compliant, it is crucial to understand and incorporate the latest state and federal tax laws into every payroll processed.  Proper training for payroll staff may be required on a regular basis to ensure proper processing and tax filings.  An employee may have the right to file a lawsuit, if the employer’s payroll mistakes put the employee at a disadvantage.  If an employee is paid incorrectly over a long period, it may take the employee several months before noticing the error, and the employee may then owe hundreds of dollars, putting both parties in a difficult situation. 

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5. Outsource Your Payroll
Are you really saving money, processing payroll yourself?  A payroll study by Action Research, a market research and insight firm, reported that 75% of CPAs serving small businesses did not think their clients had the expertise required to handle payroll processing, and 68% even suggested their clients’ should instead focus on the other demands of running a business.

A payroll service provides small businesses the freedom to focus on their business, and minimize non-core functions, like payroll that do not directly increase sales or is a source for profits.  

Employment taxes. New hire reporting.  Wage and hour laws. Overtime requirements. Unemployment compensation. Workers’ compensation. The Affordable Care Act.  Who has the time to keep up with the ever changing tax laws and government regulations?  Provide complete peace of mind, and leave the headaches to your payroll service. 

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