Payroll processing is a bit complicated; calculating hours and wages for individual employees, then add to this mix, tax laws, labour laws, local, state and federal laws and you have a lot on your plate. When you start your own business, your first priority is to keep your costs low. So you take care of everything- from recruitment and training to how to calculate payroll taxes and bookkeeping.
Then your business begins to grow- the number of employees increase, you open new branches, you have more orders than you can keep up with; now you don’t have time to handle all the tasks you had taken upon yourself. So what now? That’s when you know you should consider outsourcing payroll processing. Here are some more instances of when you might want to consider outsourcing payroll processing.
- If You Have Out Of State Employees– Tax laws vary depending on the county and state. As your business grows, it will be difficult for you to keep track of the tax and labour laws of different states. In such cases, it is best to leave the processing to professionals and allow them to worry about how to calculate payroll taxes.
- If You Have More Than 50 Employees– Once you have more than 50 employees, you are required by law to show that your employees have affordable health coverage; another task to add to your ever increasing pile of work. Payroll processing companies can handle this ease and you can focus on your growing business.
- If There Are Payroll Changes Every Cycle– Variable hours, part time employees, new employees; if you see a lot of that every cycle and have a tough time keeping up with things, you just might want to consider outsourcing.
Whether you are just trying to figure out how to calculate payroll taxes or know your way around well, you have to be very careful how you handle your company’s payroll. If you don’t, the next thing you know the IRS will come calling, simply because you didn’t pay your payroll taxes. So if you feel you can’t handle it, do not hesitate; contact a good payroll processing company.
“Employees are a company’s greatest asset- they’re your competitive advantage. You want to attract and retain the best; provide them with encouragement, stimulus and make them feel that they are an integral part of the company’s mission.” – Anne M. Mulcahy, former chairperson and CEO, Xerox Corporation.
All business owners know this, but not everyone will admit it or work towards ensuring that their employees are treated well and given the best. The benefits of having happy employees are many.
- Serve customers better
- Work on solving problems proactively
- Increased productivity and efficiency
- Work together as a team
Dissatisfied employees will never give their best to the job. They really don’t care whether the company thrives or fails. When you can go so far as to invest in bookkeeping solutions and IT, why shouldn’t you make an effort to ensure your employees are happy. So what can you do to ensure your employees are happy?
- Listen to Them– Talk to your employees and listen to what they have to say. Nothing shouts respect as when you make the time to listen. If your employees feel heard and respected, they will always do their best, even when no one is watching.
- Regular Appraisals and Feedback– Employees like to know how they are performing. They like to know that what they are doing is being appreciated and is making a difference. Make time to hold appraisal sessions, provide constructive feedback so that employees know where they stand and can improve their performance.
- Do Not Be Stingy with Leaves– No one likes having to beg for leaves, especially when it is technically their right. Studies show that satisfied employees take lesser leaves, so you really don’t have anything to worry about. All bookkeeping solutions and outsourcing businesses say you should relax with the leave rules and give your employees some space.
- Make Time for Team Outings– Team outings are great opportunities to interact with employees, build team spirit and just to relax. Make it a point to have team outings or get together at twice a year.
Employees hold a company together. Do not make the mistake of thinking that you can do all it by yourself. So find ways to make your employees happy; you need to make sure that they are as invested in the success of the company as you.
IRS audits- I am yet to meet a business owner who doesn’t shudder at the word, even online bookkeeper for that matter. No one likes to draw the attention of the Internal Revenue Service. So how do you draw the attention of the IRS? Well, the IRS has a system of sophisticated software and manual checks in place to determine which tax returns should be audited. Here are some triggers that can draw the attention of the IRS.
- Failure to Report All Your Income– This is a commonly made mistake. Business owners tend to overlook this when they have multiple sources of income. The IRS matches all reportable items to a person’s return. If they come across any discrepancy, they immediately proceed with a letter audit. So double check and make sure you have reported all your sources of income. Work with your in-house or online bookkeeper or accountant to ensure you don’t miss anything.
- Failure to Report Foreign Bank Accounts– The Foreign Account Tax Compliance Act requires overseas banks to report American account holders to the IRS. Individuals are also required to report foreign assets to the IRS. Unfortunately, as any in-house or online bookkeeper will tell you, compliance with this law increases the likelihood of you being audited, while failure to report it can result in penalties and has legal ramifications. The reason for this is the belief that those who hold foreign assets have something to hide. If you own foreign assets, make sure you report them.
- Mixing Business and Personal Expenses– The IRS is particular about keeping business and personal expenses separate. Some individuals are in the habit of writing off personal expenses as business expenses for deductions; this frowned on by the IRS. Excessive business deductions are a sure way to trigger an IRS audit.
- Earning Over $200,000– Tax payers with an income less than $200,000 have an audit rate of 0.78%, while those with an income over $200,000 have an audit rate of 2.71% and 7.5% for those with incomes over $1 million. So if you make an income of over $200,000, you should be prepared for an IRS audit at any time.
An IRS audit is not a bad thing as your in-house or online bookkeeper or accountant will tell you. If you have nothing to hide and pay the IRS what you owe, you don’t have anything to worry about.
Every business owner knows that bookkeeping, accounting and financial reporting is important. Despite this knowledge, many small and mid- size businesses don’t pay sufficient attention to their financial reports even when they outsource receivables management, bookkeeping and accounting. Failing to generate regular reports and periodically reviewing them can be detrimental to the health of your business; here is how.
- IRS Audits and Penalties– Your financial reports are a direct reflection of your books and bookkeeping. If your books and reports are incorrect, you will end up filing inaccurate tax returns. This can result in your company being audited by the Internal Revenue Service and state or local tax bodies. You don’t need that headache do you?
- Ineffective Business Strategies– Finance reports help business owners make informed business decisions and develop effective strategies. So what happens if you don’t have up-to-date or accurate reports? You don’t know where your business stands and you end up making ineffective decisions and strategies which are sure to steer your business in the wrong direction.
- Lose Support of Banks and Private Investors– Most businesses depend on banks, private investors and the like for loans and financial support. These institutions in return require timely and accurate financial reports to gauge the performance of the business they are investing in. Not providing regular reports is a sure shot way to lose their support.
Bookkeeping and accounting, though not core business functions, are vital to maintain a thriving business practice. If you do not have the time or knowledge to handle your business’s finances, you could consider outsourcing your bookkeeping and accounting. Numerous businesses today outsource receivables management, payroll processing, accounting and more to ensure that their business doesn’t suffer in any manner. It also allows you to focus on core business functions and other areas that you are good at, so that you can work towards growing your business. No matter what you do, do not make the mistake of ignoring your finance reports. So take the step towards ensuring a secure future for your business.