Since your time is valuable, it’s important to make the most of every minute you spend on payroll tasks. With this in mind, there are several common payroll tasks that every business owner should know how to complete so they can save their valuable time for other, more important tasks. Here are the most common payroll tasks that you should be familiar with if you own your own business or if you work at a small business that has outsourced its payroll tasks to an accounting firm.
Tracking Hours Worked
Tracking hours worked is a necessary part of any business, even when you have just one employee. It’s also important to note that not all states are created equal when it comes to regulations about tracking work hours. A good thing to remember is that there are three categories of employees in terms of regulations on working time: exempt, non-exempt, and overtime. Exempt employees are expected to track their own time while non-exempt workers should have their hours tracked by their employer.
Recording Regular Timely Payments
If you’re paying people for their services on a regular basis, like payroll, or if you receive payments from customers, it is important to keep accurate and timely records of these transactions. But if you don’t record them in a timely manner, you might not have enough information to do things like calculate taxes and issue W-2s at tax time.
Calculating Gross Pay
First, add up all your employees’ gross pay by making a list of each employee’s name and their hourly or weekly wage. Next, add on all applicable taxes to get an idea of how much you need to withhold from each employee’s paycheck. Finally, calculate how much income tax you need to remit for yourself as well as for your employees by multiplying one-twelfth of your total income taxes due for each month by each employee’s gross pay.
The Internal Revenue Service allows businesses to deduct taxes and fees from their employee’s paycheck so they don’t have to pay as much tax. While not all businesses will choose to take advantage of these deductions, it is important that you know how each deduction works and why you might want to use them. This post will teach you about three of those deductions: Federal Income Tax, FICA Tax, and State Income Tax.
Tracking your expenses is one of the best ways to ensure that you’re living within your means. If you have no idea where your money is going, there’s no way to tell if you’re actually staying on budget, or how much room for growth you have. The first step in successful budgeting is being able to accurately track what you spend every month. That starts with properly documenting all of your business-related purchases.
This can be a lengthy process that’s not for everyone. However, it’s important that owners review each month’s payroll and attendance information to ensure all transactions were recorded correctly. If anything appears out of place, you should fix it as soon as possible so your business stays on top of record keeping. Checking these records will also help you catch any errors or fraudulent activity sooner rather than later. It may not seem like a high-priority task, but if you don’t take care of it regularly, someone could slip through without getting paid and before you know it – your business is at risk of facing serious legal and financial issues.
Keeping on Top of Employees’ Personal Information
We all know that hiring top talent can often make or break a business. But what you may not realize is that making sure your employees are taking care of their financial responsibilities—to you and to other creditors—is also key to ensuring your business’s success. It’s common knowledge that managing your employees’ personal information (such as social security numbers, addresses, etc.) is an important piece of payroll administration. However, many companies fail to recognize how important it is to consistently maintain good employee records.
Use Payroll Software to Automate the process
While there are some businesses that can benefit from handling payroll tasks on their own, most small- to medium-sized companies will get more work done—and get it done more quickly—if they use payroll software. Instead of spending hours punching data into your calculator, you’ll be able to simply select your pay period and run reports on paychecks for employees or government agencies like Social Security. If you keep up with federal and state tax reporting requirements (which is easier with payroll software for small business specially), you may even find that human resources chores take less time than they used to! As an added bonus, using payroll software can help build strong corporate culture by making everything transparent so everyone knows what’s going on.