Here’s What to Think About if You’re Expanding Your Business (And Therefore, Your Payroll)
If you’re planning to expand your business, one of your top priorities should be making sure you’re in position to classify and pay employees and independent contractors properly. This is especially important if you’re looking to hire people in any state without any red tape. Today, we’ll talk about what it takes to run payroll and when it’s helpful to engage a partner.
Doing Payroll Right
Since payroll is always a complex, high-stakes business, it’s worth investing anything required on the front end to make sure you do it right. Whether you train an in-house team or engage a partner, they need to be in position to classify correctly, stay on top of laws as they change, identify and respond to the different tax requirements, and have a system in place that allows the process to be simple, accurate, and fast. This helps you avoid future fines and legal battles.
Doing it right means doing the following:
- Learning local employment laws. This includes identifying regulations regarding working hours, holidays, sick pay, insurance, and more and having a (preferably automated) system in place to follow those rules.
- Onboarding workers. This includes collecting information such as name and date of birth as well as tax forms, background checks, benefit status, and work eligibility.
- Storing and securing data. Since you’re dealing people’s personally identifiable information (PII), you MUST have a way to secure that highly-sensitive data. The fines for mishandling data are serious, so you should be equally serious.
- Authorizing payments and ensuring your employees get paid accurately. This includes identifying the appropriate deductions/taxes, keeping accurate records, paying on time in every location, sending out notifications, reporting as required to government institutions, etc.
- Having a system in place to identify and adjust to changes. You don’t always have time to wait weeks to adjust to new laws. Things evolve rapidly, so your system needs to be ready to evolve just as rapidly.
- Staying compliant. Laws are different from place to place and do change frequently, so your payroll management software solution should have systems in place to ensure compliance wherever you operate.
Would Outsourcing Payroll Benefit Your Business?
Outsourcing payroll is especially valuable in certain situations. If a company needs to hire employees in multiple states, is growing rapidly, and/or needs to hire temporary workers frequently, engaging an Employer of Record (EOR) could be a game changer. An EOR mitigates compliance risks, increases payroll efficiency, and eases the administrative burdens of managing a workforce.
The Bottom Line
Payroll is one of the most complex and challenging aspects of operating a business and should be given appropriate attention by every business. When a company is growing, payroll is one of the most important aspects of business to have in good working order. The right people on your in-house team or the right partner are essential. If you think a partner would be beneficial to your business, reach out! Relax: We got it.