Is payroll wasting too much of your time?

Payroll is one of the most important responsibilities for business owners. It ensures employees are paid on time for their work and that the company is compliant with IRS regulations.

But despite the importance of payroll, many small business owners struggle to get it done. This often leads to mistakes, wasted hours, penalties, and audits.

Given how serious these issues can be, we’ve put together a list to simplify the process and keep owners penalty-free.

1. Know How to Classify Employees

Contractors and employees are not the same in the eyes of the IRS. This means that classifying them incorrectly can get owners in a lot of trouble. 

According to the IRS, a contractor is viewed as anyone that controls their own methods of work and schedules. Employees are viewed as anyone whose work and schedule is dictated by the employer and who receives regular pay, benefits, and W-2’s.

So, owners need to carefully analyze their workforce and categorize each worker correctly.

2. Use Payroll Software

Every owner should be using payroll software to simplify the process. That’s because these programs significantly cut down the amount of time it takes to do it all while preventing any errors that could come from manual calculations.

The software can be used to automatically calculate wages, spot deductions, and file taxes without owners needing to intervene.

Some of the more popular programs used are QuickBooks, Rippling and OnPay, all of which offer different features at various price points, so there is guaranteed to be something suited for every line of business.

3. Keep Detailed Records

Payroll records are legally required, which is why every owner needs to prioritize record keeping. 

Although this can be done manually, it will likely take hours and leave owners at risk of errors. To prevent mistakes from impacting you, consider using a payroll software system. These programs automatically save, file, and back up records. Everything from wages, tax forms, overtime hours, and benefits can all be stored in one place on the program, so you don’t have to worry about things being overlooked or accidentally deleted.

4. Reconcile Regularly

Another tip to simplify payroll is to reconcile files regularly. Owners should set time aside every month or quarter to go through all of the filings. During this time, be sure to check if everything has been properly filed, saved, and accounted for. Doing this regularly will help spot errors quickly and can give owners time to fix them before they grow into a bigger issue.

5. Seek Professional Help

Payroll can feel overwhelming, especially for those that have faced penalties in the past, which is why it’s best to seek the help of a professional. A professional like us at A.P. Accounting and Tax Services will be able to assess your current process to ensure the system you are using is compliant and efficient. Professionals are also able to advise on any new laws, regulations, or deductions that could impact the business. That way, you can rest assured your tax filings will be in order, and you can go back to focusing on what matters most to you – growing your business.

To simplify your payroll process and keep your business running smoothly, consider giving us a call at 407-328-5001.

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