If you own a contracting business, payroll may be one of your least favorite tasks. Whether you have a designated payroll administrator or not, here are several tips and tricks you can learn to make the whole process flow seamlessly.
7 Tips and Tricks for a Payroll Administrator
1) Set Clear Policies
The best piece of advice for a new payroll administrator is to create a set of clear policies. These simple and concise rules should outline administrative procedures like attendance, expense reimbursement and commissions.
2) Properly Classify Employees
As a payroll administrator, it’s your job to properly classify all employees into one of two categories: exempt or non-exempt. If this task is not done correctly, because if you do not you could ultimately owe back wages and/or fines.
3) Collect Appropriate Paperwork
Payroll administrators must also make sure all of the employees of a contracting business have completed a W-4, which documents filing status and allowances. In addition, you must locate your business’ Employer Identification Number, which is used to distinguish your company from others.
4) Choose a Payroll Schedule
A contractor’s payroll schedule can vary according to the size and type of the business.
The most common payroll frequencies are:
- Twice a month
- Every two weeks
5) Use Direct Deposit and Electronic Pay Stubs
If you would like to save time and money, direct deposit is the way to go. It can cut costs by as much as $100 per employee, per year and eliminate the need for paper stubs.
6) Calculate and Pay Taxes and Withholdings
As an payroll administrator, you are responsible for submitting federal, state and local tax deposits on a monthly basis. Every quarter, you are required to send in your employer federal tax return and any state or local returns in addition to your annual filings and W-2s at the end of the year.
7) Plan for the Future
Now, it’s time to consider the future of your business. You should prepare for upcoming changes to laws and policies that could impact your company. As the calendar year ends, watch for the arrival of next year’s W-4s, W-2s and other important documents in late November or early December.
Payroll administration may not be the most exciting task you will do all month, but doing this essential function correctly will improve your business’ overall financial health.