For startups and small businesses, payroll processing is one of the biggest challenges – most cumbersome and time-consuming. However, it is an integral HR process and even the smallest mistake can lead your business to a big problem. Therefore, it is important to take a comprehensive approach to payroll management, taking vital factors into consideration such as minimum wage, leaves, overtime, payroll tax, compliance, etc.
Owing to the complexities of this process, many businesses consider payroll outsourcing to ensure more efficiency and cost-effectiveness. Here’s how a professional HR outsourcing firm manages payroll management for small businesses:
1. Set Clear Guidelines for a Definitive Payroll Policy
For any small business, it is important to be up-to-date with the current labor laws and prevent violations. At the same time, they need to be compliant with the IRAS. Setting up a payroll policy will help understand how payroll works, employee benefits and remuneration, payroll period, and other factors. The payroll documents must comply with the IRAS standards. This ensures the employees are fairly classified and remunerated.
Make sure your small business holds an Employer Identification Number. A payroll outsourcing company will define a clear payroll policy, help get an EIN, and ensure your business is safe from IRAS penalties due to non-compliance.
2. Set up an Efficient Payroll System
Small businesses tend to have a manual payroll system, which initially helps them save money. However, manually doing payroll can be a time-consuming process and is prone to more errors. This can become costlier for your business in the long run. Outsourcing to a professional or automating payroll helps save time, while you can adopt the most accurate and proven methods to calculate payroll and stay compliant. And if you have a shortage of quality resources, it is always better to hire payroll outsourcing services.
3. Input & Categorize Employee Data Carefully
Categorize your employees appropriately, which is important in determining minimum wages, overtime, and taxes. Every state has its own requirements of employee categorization. So, make sure you follow specific rules as needed.
To have an efficient payroll system, small businesses should consider payroll outsourcing to a professional like GOHRBPO.