The Great Retreat has taken place. Then there was inflation. Now everyone is talking about a recession. However, many corporate leaders have not let these issues bring them down. In fact, a recent survey shows that most small businesses are planning to expand soon. However, as companies expand, one of the first tasks will be to find ways to simplify payroll.
How many small companies are looking to expand by Q4 2023? Nearly two-thirds, according to bank of america reporting. And if you’re one of those fearless entrepreneurs, you need to make getting bigger as easy as possible.
While payroll may not seem like such a big deal, it can be a major headache when scaling. Typically, expanding involves adding more people to your list. This is good because you can do more. But it does require that you don’t get bogged down in the complexities of keeping the payroll running smoothly.
Remember: people won’t appreciate it if you ruin their paycheck. As such, you’ll want to head off any concerns by taking a few pragmatic steps. Namely, try the following strategies to simplify payroll. You will sleep better at night and your team will get paid every time on time.
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1. Collaborate with the EOR to calculate the payroll of internal workers.
In today’s digital world, you don’t have to stick to local candidates when you want to hire talent. However, you can’t just assume that you can pay foreign workers the same way you pay local workers.
Many small business owners realize too late that onboarding professionals from other countries can be a challenge. From calculating taxes and enforcing labor laws, little things can become giant stumbling blocks.
The easiest workaround for this issue is to partner with an EOR, which stands for Registered Employer.
The EOR must have a legal entity in the country where you want to hire at least one employee. Although the employee will work for you in practice, they will be paid through the EOR and will be hired by the EOR on paper. As Remote explains, global payroll outsourcing responsibilities reduces the likelihood that you will run into compliance issues or other legal issues.
2. Ask a third party to audit the classification of your employees.
Many businesses have fallen into the trap of misclassifying their employees. The US government regularly monitors lawsuits employees who were misclassified.
For example, a common mistake companies make is calling someone an “independent contractor” when that person is actually acting like a full-time employee. Not following the right classifications can make your life miserable and potentially tarnish your brand’s reputation.
It’s worth paying a consultant to help you make sure you’ve accurately classified all of your current and expected future employees. You may even want to browse online resources to understand the difference between worker classifications. The more you know, the less likely you are to trip.
3. Switch to an automated payroll system.
Do your team members still manually process any part of your payroll? Manual data movement can lead to unintentional human error. It can also take a lot of staff time. When you expand, you only increase the chance of payroll errors and also create more workload for your people.
Technology has come a long way. Today, there are many cloud-based automated systems and solutions, including those focused on payroll. The most valuable ones allow everyone to access parts of the system.
For example, your administrators can see all the information, while your employees can log in and view their billing information. Some automated systems have apps so employees can enter their weekly or biweekly hours, further simplifying the process.
4. Pay everyone (even vendors and contractors) at the same time.
Is your payroll performance undermined by varying payroll times? Do you pay some people monthly, others biweekly, and contractors on demand?
These phased payment rollouts may be right for you right now. However, they won’t run forever. The bigger you get, the harder it will be for you to maintain such a haphazard pay system.
The answer is for your company to start consolidating all pay schedules.
An example would be putting everyone on the same payday, regardless of their roles. This means that all money will be debited from your account at the same time, so you will always know how much you need to have on hand to simplify and meet your wage requirements. You can even do this with your contractors. Just let them know in advance that if you receive their bills by a certain date, you will pay them on the next payday.
Who cares what people say about supply chains and higher prices? If you feel like it’s time to scale, do it. Just make sure you remember to take a few precautions to help streamline your payroll before the growth spurt.