7 Tips to Help with Small Business Payroll Problems

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Overpayments to employees and contractors cost companies millions of dollars each year, not to mention the problems that poor payroll management can cause with the IRS!

In order to keep your company’s payroll in check you need to get a handle on what is happening first. Our list of handy tips will help you do just that – let’s dive straight in:

1) Hand it over to the professionals

I know what you are thinking, “What kind of tip is that?” Well, in short, it’s the kind that could save you a whole lot of drama further down the line. Unless you have previous experience in accounting you are running the risk of falling foul of some of the details associated with payroll management.

Having a professional handle your payroll will ensure that you are complying with all federal, state and local laws. If you were to handle it yourself, and you make a mistake, the cost can be enormous. You are far better off leaving it in the hands of an expert who has the necessary online payslip software to get things right first time.

2) Find out your Employer Notification Number

Regardless of who is handling your payroll, you are going to need a Employer Notification Number, or EIN for short. If your company is a partnership or corporation the likelihood is that you will already have one. However, if you don’t you should contact the IRS immediately to get yours so that you can hand it over to your payroll processor.

3) Know your workforce

Determining the difference between your staff is essential to good payroll management. Correctly classifying whether they are 1099 independent contractors or W-2 workers who are entitled to benefits such as health insurance will allow your payroll manager to handle things correctly.

4) Get creative

Instead of giving workers a regular pay rise that will cost you money on your tax bill, why not get creative and offer them other incentives instead. Many alternative benefits such as a company cell phone or a retirement plan are tax-free, meaning that you can still treat your employees well, but not pay over the odds for your payroll tax.

5) Keep your book up to date

Keeping good books is essential if you want to maintain good business practice. A profit and loss statement will help you determine your payroll taxes as well as highlighting ways that you can lower other business costs as well.

6) Split your accounts

Having a separate bank account for your payroll makes a lot of sense. It allows you to set aside the money needed for your payroll and also give you another account to keep your taxes separate too. Doing so will keep you ahead of the game and ensure that you always have the money at hand to pay those that matter – your employees and the tax man.

7) Make deposits for federal tax

Whenever you issue your payroll it is a good idea to get into the habit of making deposits for federal tax at the same time. This will help to ensure that everything is applied correctly and will go a long way to preventing any hefty fines coming your way from the IRS.

  

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