How Small Businesses Can Face Payroll Challenges
The challenges of running a small business are many, and among them is payroll, which can feel like a full-time job. Here, Bianca Mueller, CPB, community manager at Wagepoint, discusses the payroll challenges small businesses will face in 2022 and offers her tips on how to overcome them.
Invest in Cloud-based Payroll Software
The best way for small business owners to ensure they’re keeping up with changes in federal, state and local tax laws is to invest in cloud-based payroll software.
“There’s no easier way to ensure tax deadlines are met than using actual payroll software. They’re so affordable nowadays, and they keep track of everything for you,” Mueller said.
While some small business owners are reluctant to invest in payroll software because of the cost, it will actually save them money in the long run, Mueller said, as well as saving them time because it’s so efficient.
“Cloud-based software is live and updated with all the latest tax requirements. If you’re using desktop software, those updates have to happen manually. Cloud-based payroll software will automatically do the calculations for you,” Mueller said.
Payroll has become a prominent topic during the COVID-19 pandemic, as many businesses that applied for government funding needed to ensure they were compliant and had up-to-date information, Mueller said. Investing in payroll software is a safe bet nowadays.
“Small businesses owners should be focused on growing their business and not worrying about navigating changes in government legislation around payroll,” Mueller said.
Move to a Project-based Method for Tracking Employee Productivity
Keeping track of employee hours has become trickier during the pandemic because so many employees are now working remotely and have nontraditional schedules.
“Employees are now working from home and may be spreading their hours out across a day, so that traditional model of working nine-to-five is sort of out the window,” Mueller said.
Although some companies use software that allows managers to see when an employee is “online,” the actual productivity of the employee is not being tracked. This is why Mueller recommends moving to a project-based form of tracking, depending on the type of work being done. She also recommends continuing to have regular meetings with employees to foster accountability. That way, business owners don’t have to worry about micromanaging employees.
“I am finding that remote work positions are less focused on regimented schedules and more on tasks and objectives. This approach also promotes team collaboration and accountability,” Mueller said.
This ties into having a cohesive digital culture, Mueller said. She also recommends that small business owners with a remote workforce assess employees’ digital dexterity. Have them fill out an intake assessment to determine their willingness to adapt to new technology.
“Employers should consider during the hiring process whether potential employees aren’t comfortable with tech or aren’t flexible about using new software,” Mueller said.
Choose Payroll Software With an Employee Portal to Keep Data Secure
Payroll software with an employee portal will help to keep data secure because it guarantees privacy. Employees can use the portal to keep track of their pay history, tax forms and banking information. Plus, most of the time, employee portals are included in the cost of the software.
“The days of emailing payslip information or tax form documents are gone, or should be at least…don’t use email to communicate payroll information anymore!” Mueller said.
Employees can update their banking and contact information directly in the portal themselves, so there’s no transfer of data, which is good not only for keeping the information safe, but also for accuracy.
“The more hands that touch it, the higher chance for data input errors,” Mueller said.
Mueller also recommends that important employee documents, such as any documents that are part of the onboarding process, are digitized, encrypted with a password and put in a shared location online. That way, there are restrictions on who has access to it.
“In a payroll department, there will be people who can see all the information and people who can see only some of it. Restricting access regarding who can see and edit information is really important,” Mueller said.
A Note on Flexible Payment Options
“The future of payroll is among us! And with the focus now on the employee experience, the topic of convenient pay is starting to make headlines,” Mueller said.
One option is on-demand pay, in which employees are given debit-type cards with access to wages to-date so employees don’t have to wait until payday. While it is fairly simple to implement, Mueller said, it does require more payroll administration.
While some employers are providing the option for staff and contractors to be paid via cryptocurrency, it can cause tax implications that can affect the value of the wages, Mueller said. She stressed the importance of consulting with an accounting professional and doing due diligence before implementing this option.
“I wouldn’t recommend small business owners explore alternative payment options if they process payroll manually,” Mueller said.
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