Effective payroll operation and management is a key business administration activity and one that’s important to get right from day one.

Ultimately, payroll is the method by which your employees and other contributors are paid what they’re due regularly and in the right amounts. Errors in payroll and missing expected payment dates can cause disruption, expense and possibly a hit to the morale of the workforce.

doing payroll
photo credit: kate hiscock

The following can help you manage a streamlined, effective payroll system:

Undertake sound security

Ensuring only those entitled and trusted to access your payroll system is key to avoiding fraud and tampering, so institute strong password access. For physical aspects such as check payments it’s worth investing in modern, high tech printed items including tamper proof voucher checks for payment of vendors and staff where appropriate.

Do use the right payroll software

Using the right tools for the job is important anywhere in business, of course, and this applies especially in payroll.

Many powerful packages exist and, with the advent of software being held on the cloud as opposed to being installed on a local computer, it’s possible to ‘buy what you need’ and add to it later if you need to by way of extended capacity and extra features as staffing levels rise and your business expands.

When choosing payroll software, determine your requirements precisely and have some idea of how you may require extended features later on from your payroll in order to ‘future proof’ it without having to start over with an entirely different system as your requirements change.

Do organize your payroll routine properly

Staff and other contributors will expect their payments at a certain time each week, month or whatever frequency has been agreed so you should ensure your routine for payment doesn’t vary.

Being organized extends to ensuring the right calculations and deductions are made so your staff are paying the right amounts of tax and other stoppages. Making errors here is very disruptive and potentially expensive and can land you in trouble with the IRS (Internal Revenue Service) not to mention causing disgruntled staff if they’re being under or over paid.

Don’t solely rely on the tech

While modern payroll software from a respected vendor will take the strain of regular payroll admin, it’s important to manually check all transactions are accurate on a regular basis.

For example, a wrong payment repeatedly going out won’t be spotted by the tech necessarily – it’s down to the vigilance of a member of payroll staff to flag up errors before they compound.

Efficient money management

Don’t delay payments

People rely on their salary or wages to be paid on time, so delays can not only inconvenience staff and others but harm morale if it happens frequently.

Don’t wrongly classify your staff and others

Ensure each person you’re paying is correctly classified or disruptive mistakes can occur causing late and incorrect payments – and possible difficulties with the IRS over someone’s tax position.

Broadly there are three categories of those you’re paying for work done:

  • Salaried employees – regular full or part time
  • Hourly employees – their hours may vary
  • Independent contractors – usually self employed people providing a service

The more common mistake is to classify hourly paid workers as contractors; this may happen because, sometimes, both categories of person work a variable amount of hours so may seem similar – but are in fact quite different as one is self employed and the other isn’t.

Silent efficiency

When efficient payroll operations and management ticks over week in and month out ensuring everyone is paid on time and at the correct rate it barely gets noticed. It does when problems occur: so the goal is to run a strong

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