Payroll Management - Start Planning Now
Payroll management is an issue that is never too early to start considering. Obviously, in the early stages of your business, your payroll management will consist of paying yourself. As your business grows you will have to concern yourself with compensation for you and your employees. Payroll management in a business that has employees requires planning for salaries and hourly wages. There will also be payments to subcontractors for technical and sales related services to consider. You will eventually become too busy to do it all yourself and you will need help. Before you get to the stage where you need to hire additional help, it is a wise strategic move to think about your payroll management needs and plan accordingly.
Payroll Management Issues
Salary versus hourly wage
Bonuses and commissions Compensation Package - vacation pay, time off, sick days, holidays
Employee Benefits - health care, dental plan, pension
Insurance - Disability and Life.
A common aspect of payroll management that gets overlooked is payroll taxes. No matter what you do, you can't avoid these for either yourself or your employees. The employer's portion of payroll taxes will cost you money. Effective payroll management takes this expense into consideration from the start.
The Bottom Line on Payroll Management
Payroll management is an issue you need to think abut before you have employees. Even if the payroll roster is just you, your business will still have payroll expenses. It is never too early to start thinking strategically about your payroll management. You should be formulating a plan for handling employees and subcontractors and the expenses that come along with them, long before you actually need them.
What is Payroll?
Payroll is one of many accounting transactions that manages the method of paying employees for their services. This happens after processing the several requirements for holding back money from the employee in order to pay payroll taxes, insurance premiums, employee benefits and other deductions. The process involves calculating the amount due to each employee, such as hourly wages, commission from sales, reimbursements and so on, either by using a standard per diem rate or based on amounts actually spent by the employee.
The term “payroll” takes into consideration every member of the company paid on a regular basis. Some employees are paid on an hourly basis or based on output, while yet others are paid on a monthly basis. A payroll specialist takes into account the various payment methods, and checks are issued appropriately.
Companies tend to use measuring tools that are neutral, such as timecards or timesheets filled out by supervisors, in order to ascertain the final amount of payroll due each payment cycle. Standard deductions such as social security, medical insurance, charitable contributions and the like are first deducted. The remaining amount is then made into a check and becomes the employee’s net pay for that pay period. Payroll departments also distinguish the employer and the employee on the basis of a federal code, and keep tabs on total income and deductions for a given fiscal year.
For small businesses, keeping the payroll account well-oiled is a matter of priority. Even if the business has not broken even, employees will have to be paid. Therefore, small companies prefer to keep their payroll debts to a minimum until they achieve a measure of profitability.
Trained accountants can easily set up an efficient payroll mechanism, time-consuming though it is. Small businesses use software to manage their payroll systems. Large companies will employ accountants to do the job. But companies without the means to sustain their payroll systems will give the job to specialists outside. Since payroll records are maintained on the basis of impartial norms such as time cards and federal tax forms, accounting consultants calculate, save data and issue checks according to time deadlines. All any employer needs to do is update the payroll company when with relevant changes as and when they occur.
Pay Your Auto Insurance Through Payroll Deduction
Most workers in the United States have many different bills automatically deducted from their paychecks. Health, dental and life insurance are the most common payroll deductions. Depending on your personal circumstances a number of other items may also be deducted, from child support to certain loan repayments. Many Americans are unaware, however, that in some cases auto insurance may also be paid through payroll deduction.
Auto insurance has only recently entered the payroll deduction market and the option may be unavailable through certain insurance providers. Most commonly, payroll deduction is offered to employees who purchase auto insurance through their employer. However, the method is becoming a trend and private insurers are beginning to offer this method of payment.
Busy families may have trouble staying on top of their bills for reasons ranging from lack of time to lack of money. Payroll deduction allows the money to be deducted before it ever hits your bank account, making it easier to part with the funds. Payroll deduction is automatic, which ensures that the payment is never forgotten.
Payroll deduction works well for customers who have a stable paycheck from week to week. This method is not for everyone however. The premium is generally deducted all at once, so if your paychecks are unsteady from week to week, you may have trouble budgeting the payment.
Before you enroll in payroll deduction for your car insurance, be sure that you know what will happen if you fail to make enough money to cover the premium. Many insurers will attempt to resubmit the charge during the next pay period and then send a bill to your home if it still does not go through. However it would be within the company’s rights to simply cancel your policy for lack of payment, so check the company’s policies in advance. Also find out what will happen if you change jobs. Even if your insurance is sponsored by your company, insurance regulations will allow you to continue your coverage for a certain period of time. However, if you are no longer drawing a paycheck you will need to change your billing method. Make yourself aware of this process before it becomes necessary.
Payroll deduction is a simple, safe and easy means of paying a variety of bills. Payroll deduction is a relatively new option for paying auto insurance premiums and it may be difficult to find an insurer that offers this option. Payroll deduction is not for everyone, especially those whose paychecks vary widely from week to week. If you are able to locate a company that offers payroll deduction and your pay is fairly stable, you may find that the time savings combined with the ease of use make payroll deduction the best option for you.
