January
As a small business owner, your focus is more than likely on how to make money, so how to arrange your payroll system may be the furthest thing from your mind. I know you probably have enough things to worry about, but taking the time to figure out a payroll system that works for your company now may save you from running into problems in the future.
Plan for the Future
If you plan for your small business to grow, you need to arrange your infrastructure in such a manner that will accommodate that growth. By starting your business off with a pay structure that is simple and consistent, you avoid the added hassle of having to change to a different payroll system down the road. Paying your employees in a regular and timely manner will go a long way in keeping them happy and you on a regular schedule.
Before you decide on how often to pay your employees, it is critical that you familiarize yourself with your state’s laws regarding payroll. Payroll laws vary between states and different types of employees. There are also laws pertaining to how promptly employees must be paid after the work week ends. The U.S. Chamber of Commerce’s website can provide you with necessary information regarding federal and state-to-state payroll guidelines. This can save you the trouble of possible legal troubles in the future and help you avoid having to work a lawyer into your payroll.
Weekly is Better
The main question boils down to whether you want to pay employees on a weekly or monthly schedule. Determining which system is right for your business is largely determined by what type of workers you employ. A weekly pay schedule is arranged such that the “work week” consists of the same days of each week, and payday would fall a set number of days after the end of the pay period. For example, a two-week pay calendar would start the week off and end fourteen days later. Payday would then fall about a week after that day. The bi-weekly schedule is the most common amongst small business owners because it is consistent and accommodates hourly pay better than the monthly payroll. The problem of the weekly or bi-weekly schedule is that the payday may fall close to the beginning of the new month, which can lead to a tight budget if that is when many of your business expenditures come due.
When to Get Help
For many small businesses, payroll is usually taken care of by the owner. As the business grows, though, there may come a time when… well… you just don’t have the time. There are a lot of things that go into payroll, such as taxes and healthcare benefits. Although most payroll software can handle these tasks, there is still only so much you can do. If the rest of your business is suffering because you are too busy working on payroll, you might consider hiring a company to handle it for you. There are many banks or payroll companies that can handle the payroll aspect of your business, so you can get back to building your company.
