Payroll costs for small businesses can be demanding at times. Cutting back pay or hours can scare employees into looking for other jobs and lower morale. Luckily there are a number of ways to save money on payroll that you might not even be aware of. Here are four ways that you could be spending too much money on your company’s payroll without even realizing it:
Overpayment
If you have hourly employees there is a good chance they aren’t working exactly 40 hours per week. Many will be clocking in ten or fifteen minutes early and working during their lunches. Minutes here and there can quickly add up to several hours of overtime each week, costing you a good bit of overtime pay. By carefully monitoring and enforcing that overtime should only be taken when necessary, you can cut back on overpaying your employees without reducing their wages. You should also carefully review to make sure you aren’t accidentally overpaying anybody’s base salary. It may seem like a basic mistake that wouldn’t be overlooked, but it happens more often than business owners would think, and is a simple way to avoid overpaying payroll.
Not Leveraging Benefits
Attracting talent to your small business can be difficult without an attractive starting salary, but that is not the only way to bring in top talent. Consider lowering starting salaries and instead packing in additional benefits that add value to their overall package. These benefits can include better health benefits, life insurance, meals, savings contributions, educational assistance, and employee discounts. These benefits are exempt from FUTA and FICA taxes, making your offers of employment more attractive while saving your company payroll expenses at the same time.
Not Minimizing Taxes
Payroll taxes can be a significant strain on small business owners, especially if you don’t actively work to reduce them. Using independent contractors rather than a typical worker is a great way to reduce taxes whenever possible, since an independent contractor is liable for their taxes rather than the employer. Using an accountable plan for any incurred business expenses is another way to reduce payroll taxes since any expenses used from these accounts reduce your tax liability. You also need to make sure that you always have your tax deposits in on time since the fees can be up to 10%, even for a first time mistake.
Outsourcing
ADP.com has said that if your company is using paper for invoices, payroll etc… It could be losing money. Outsourcing your payroll allows your business not to have to worry about getting payroll done bi-monthly, weekly, or whatever your company offers as far as payroll goes. Not having to worry about this allows you and your company to focus on what matters, the product or service that your business provides! You’ll want to do some price checking and look at the cost of what it would take to outsource your payroll versus having a paid in house payroll staff.