If you’re an employer, you know that processing payroll can suck up a lot of your precious time. You might have to follow certain steps like inputting employee information, double-checking payroll and withholding tax calculations, and distributing pay stubs.
With so many responsibilities and so little time, it can be hard to keep up. Instead of letting payroll pull you away from your small business, use the tips in this article to save time processing payroll.
6 Tips to save time processing payroll
Are you ready to stop wasting time running payroll and get back to your business? Then you’ve stumbled upon the right article. Check out six handy tips to save time processing payroll below.
1. Keep a handy-dandy list
If you want to streamline your payroll management process, start getting in a more organized mindset. So, how do you do that? Ah, yes. Write things down and use lists to your advantage!
To keep your payroll processing procedures in shipshape, make a list of the tasks you need to do to keep your payroll accurate. Your list can help you keep all of your payroll ducks in a row and prevent you from missing an important step in your process.
The more detailed your list is, the better. Not to mention, if you follow the list consistently, you are less likely to make mistakes when running payroll.
Here are a few examples of steps you can include in your payroll process checklist:
- Gather time and attendance information
- Enter or review hours for each applicable employee
- Calculate payroll and withholding taxes
- Double-check taxes are accurate
- Pay employees via direct deposit, check, etc.
- Provide pay stubs to employees
Keep in mind that your checklist might be different than another business’s. And, your list might vary depending on whether you do payroll by hand or use payroll software.
Review your checklist and process from time to time. If you find some flaws in your process, make necessary adjustments. The more efficient your process is, the better off your business will be.
2. Make sure employee info is accurate
For an accurate payroll, you must have correct employee information. If any information is incorrect, you’ll have to take more time to adjust the payroll and make corrections. In some cases, you might even need to rerun payroll to resolve the issue.
Before you add a new employee to payroll, have the employee double-check that all of the information on their paperwork (e.g., Form W-4) is correct. You should especially have employees check pertinent information for payroll, such as their Social Security number, number of withholding allowances, and filing status (e.g., single).
Ask employees to update their information on their forms if anything changes (e.g., employee has a qualifying life event or moves to a new address).
3. Streamline your payment methods
Many businesses still use checks during this day in age. But, some new (and more efficient) types of payment methods are making employers push checks aside.
Approximately 60% of employees in the U.S. are paid via direct deposit. Along with checks and direct deposit, there are a couple of other payment methods you can offer:
- Pay cards
- Mobile wallets
Some employers might even pay their employees with cryptocurrency and run bitcoin payroll.
If your payroll process is slowing you down, consider reevaluating your payment method. Switching from checks to direct deposit can save time by not having to print and distribute checks. Not to mention, you don’t have to worry about ordering supplies like ink and check stock.
Before you switch your payment method, brush up on state laws to find out what rules apply to each payment method. For example, some states allow employees to refuse direct deposit.
4. Avoid manual calculations
It’s no secret that processing payroll by hand can be extremely time-consuming. Plus, manual calculations leave room for payroll errors.
If you want to speed up your payroll process, ditch the manual calculations and get on board the software train.
Think about this: How much time do you spend calculating payroll by hand? How much time and energy goes into calculating payroll taxes and deductions? Probably a lot.
Electronically running payroll can drastically reduce the amount of time you spend running payroll. Online payroll services or software systems handle the calculations for you. Typically, all you need to do is enter employee information and hours, and the software will handle the rest.
Along with simplifying your payroll process, payroll software decreases your chance of making payroll mistakes, such as incorrectly calculating an employee’s federal withholding.
Ready to look for software? Our free guide can help. Check out “9 Things to Consider When Choosing Your Payroll Software” for more information!
5. Automate as much as possible
Along with kicking manual payroll calculations to the curb, consider automating other aspects of your payroll process to cut down on time.
Some payroll providers offer full-service payroll services that not only handle the calculations for you, but also collect and remit payroll taxes on your behalf. Full-service payroll helps you save time running payroll and takes away the worry and time it takes to pay payroll taxes.
In addition to automating the way you handle payroll taxes, you can also save time automating other procedures, like time and attendance.
Consider investing in time and attendance software to save time during payroll processing. Some time and attendance solutions can even integrate with your payroll software. That way, you can easily review time cards and send them directly to payroll.
6. Organize payroll records
Last but surely not least, keep your payroll records in tip-top shape by keeping them organized.
The last thing you want to do is go on a hunt for an employee document and not be able to find it. If you want to keep your records organized, be willing to do a little organizational investing.
You can organize your records by purchasing things like cabinets and folders. You can also sort your records by employee (e.g., folder for Jane Doe) or by document type (e.g., Form I-9 folder).
If paper storage isn’t really your thing, consider implementing a digital storage solution. With digital folders, you can opt to store employee and payroll records on your computer or electronic device (e.g., laptop or smartphone).
Regardless of which organizational method you select, organize from the get-go. That way, you can avoid misplacing or losing important payroll and employee information and have what you need at the tip of your fingers.
Remember, you must keep payroll records for at least three years. And, maintain records of employment taxes for at least four years.
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This article has been updated from its original publication date of July 27, 2016.
This is not intended as legal advice; for more information, please click here.