For a number of business owners, managing their payroll can often be a confusing and time-consuming process. However, taking your time, planning carefully and putting processes and systems in place will help to ensure all your bases are covered and everyone is paid on time and in full - which is the ultimate goal.
Below we outline several ways to improve your payroll procedures and avoid running into trouble.
Make sure you plan
As a small business owner, payroll duties can often seem daunting. However, with a little direction and careful planning, you will be able to avoid the majority of the common mistakes.
Regardless of the methods you use to pay your staff, it is a good idea to stay on top of your payroll at all times. Setting aside time to regularly review your payroll processes will ensure your staff are paid on time, you’re fully compliant and you have the financial resources to meet your payroll commitments.
A good practice to get into is reviewing your payroll responsibilities on a regular basis. Whether it’s at regular intervals each year, when a new employee comes onboard or as part of a full financial review.
Don’t forget your responsibilities
In New Zealand, businesses are required to abide by strict tax laws that regulate how they pay their staff. While these rules and regulations can often be complex and confusing, the cost of not being compliant or making errors can be quite high.
To ensure you stay on the right side of the law, it is important you, firstly, take the time to understand what your obligations are as a business owner, and secondly, take the time to ensure all your accounts and books are in order.
Meeting your responsibilities is made hard if you don't have systems in place that grant you complete visibility over your accounts. CashManager by Accomplish is an accounting software that provides business owners complete visibility over all of their accounts. Helping them budget and plan for all their tax obligations.
Understand payroll tax codes
A major part of owning a business is understanding the individual taxation codes and what the requirements are for each of them. These tax codes are used to determine how much tax an individual employee pays. As a business owner, it is critical your employees have the proper code and are within the appropriate tax bracket.
However, these codes are subject to change if an individuals situation changes. Common reasons for changes include salary, benefits, bonuses or student loans, so make sure you monitor your employees' situations and update their tax code accordingly if something changes.
Take into account your staff
As a small business owner, you may have the luxury of being fairly flexible with your employees' payment needs.
For example, employees many prefer being paid on a fortnightly basis as opposed to monthly because it gives them greater control over their household budgets. As a small business, you have greater leeway to make special considerations for those staff.
While having a different pay schedule for each individual employee is not wise and could get messy, being open to what your staff's needs are, will go along way. Taking your staffs needs into account may help to improve their satisfaction at the company and increase the likelihood they stick around.
Handle errors with common sense
Errors happen. Maybe there was an issue with your payment method, maybe someone was over or underpaid, while not ideal, try to deal with it as soon as possible.
Most employees will understand if something has gone wrong, and generally, they will just want it to be solved quickly and in a manner that doesn’t impact them too much. The best course of action is to discuss it with the individuals involved and design a plan that works best for all parties.
For example, if you have underpaid an employee, see that you are able to rectify the issue. Whether you are able to provide them with the shortfall that day or add it on to their next payday. This is another reason why be fairly flexible and open to with meeting the needs of your employees' is recommended.
If an issue like this does occur, it is important you have the resources available to handle it. That’s why it is wise to budget for an issue like this. Whether you purposely budget 5% more for wages or you set aside money each month in an emergency account. Having an emergency business account will ensure any error won’t have a drastic impact on your business.
One of the big issues many first-time business owners face is not budgeting or planning for their payroll. Whether you speak to an account, implement CashManager by Accomplish or simply keep up to date with employment relations, managing your payroll doesn’t have to be a burden.