Estimated reading time: 5 mins
A small business can face a lot of hurdles in their day-to-day business operations, but one of the more annoying can be the payroll system. If you are not part of a larger company, then it is something that you will usually have to develop from scratch, and that can become complicated if you are not prepared.
Whether you have a handful of employees or are well into double-digits, then you will want to be sure that you have a simple payroll process. The longer it takes to pay your employees, the less time you have for other, more significant issues or changes.
Here are some ways to simplify your payroll without making any major drastic changes, helping you get ready for expanding your business or taking on new workers. Some of these are only minor adjustments, but they can really make a difference in the long term.
Try to not overthink your payroll too much. It can be tempting to work out every single small detail, but as long as your employees are getting paid, they will be happy. If you already have a lot of agreed salaries or wages, then make the necessary calculations as simple as possible.
For example, it might help to build a spreadsheet that can help you tally up the wages a part-time employee has earned. Alternatively, it might help to create clear, simple policies relating to things like sick days or how much commission they earn.
More complexity means more effort, usually for the same result. Stick to the most straightforward calculations and payment processes, even if this means ignoring powerful and complicated tools: it is easy to get lost in a cycle of trying to improve what you do not need to improve.
This also applies to the payments themselves. Simply choosing a certain day as the payment day for each month is good enough, and communicating with your employees can help alleviate a lot of the concern they might have over not being paid when they expected to be paid.
Try to pay each employee at the same time and in the same way, with exceptions made for wage-based and salaried employees. Do not split your payments so that half of your employees get their money directly and the other get it through PayPal – you want consistency where possible.
There might be times where an employee can only use one payment option, and in these situations, make sure to use whatever they suggest. However, for day-to-day business operations, keeping a consistent payment structure can make a major difference.
It might also help a lot for building good finance records. Instead of having to compare payments from two or more platforms, you can pull information from your company’s singular payment system, meaning that it is much easier to check who has been paid already.
This consistency also removes the risk of you double-paying some employees or skipping over others. The more you confuse the payment process, the easier it becomes to make mistakes and cause even more issues further down the line.
The more consistent and reliable you are with your finance and payment process, the easier it becomes to rely on it in the future. The earlier you solve any potential problems, the less they will impact your business once you start taking on more and more employees or locations.
Take Safe Shortcuts
While you should never skip over important parts of the process, there are a lot of ‘safe’ shortcuts that might help when you are trying to get a full payment process figured out quickly. One of the most obvious is payslips, also known as pay stubs.
Pay stubs can be an important part of recording how much employees have been paid, and they can also use them as proof of employment and income to help them get loans, buy cars, or even get their own house. All states have legal requirements relating to how businesses create pay stubs and share them with employees.
However, pay stubs are not easy to create. Not only can the initial template be hard to create, but they also take a lot of time to fill in, and you can’t afford to make mistakes with them. There is also the issue of having to adapt them for different payment types or other employee details.
You can always create paystubs free with online generators to skip a lot of the hassle, getting usable pay stubs extremely quickly and with a higher level of consistency. As long as your data is correct, you can generate new pay stubs at any time without errors or bad calculations.
File Everything Correctly
A proper filing system is important as the payments that you are making are something that you will want to perfect before your business grows. Not only does poor filing make accounting harder, but it can also impact your business operations and make it harder for employees to check records.
HR and tax issues often require your financial records to be looked over, especially for problems directly related to money (such as an employee claiming that they were not paid enough). The more over-complicated your filing system is, the harder this can be to check and prove or disprove.
On top of that, a poor filing system is hard to back up, especially if it is all physical or digital. Having filing cabinets full of physical pay stubs can make your records easy to lose if a fire breaks out or you end up losing some of the documents.
All-digital filing systems are equally risky since they can be wiped or become inaccessible if they are not backed up. A good combination of both digital and physical records in multiple places is best, but even that can become tough to figure out if you are not sure where to start.
The simplest option is to try and create a central database or spreadsheet of important information in a safe place, one that you can draw from and update as necessary. This can take a little bit of time to set up but massively simplifies your business operations and accounting work.