Admin 101: What Do You Need to Ensure Your Staff Are Paid Properly?
In the same way you expect staff to show up for work on time and do a fair day’s labor, they in turn expect to be paid the correct wage for their time and skills promptly each month or week.
In order to achieve this month in, month out you need a reliable financial admin system to not only ensure your staff are paid the right amounts, but also make the correct deductions such as Medicare contributions and tax.
Completing relevant paperwork such as W-2 forms and providing staff with one at the appropriate time is also a vital part of the financial admin process.
Using payroll
These days even a business employing just one or two people will look to set up a reliable payroll system – if multiples of people are employed then this becomes vital in order to ensure staff are paid promptly and efficiently.
The various deductions to an employee’s pay is important to get right and is made easier to accomplish quickly and efficiently with a sound payroll system.
Effectively set up and run payroll will also ensure your staff and other workers are paid on time every time.
Classify workers
Identifying what type of workers you will be paying is very important to ensure you don’t fall foul of the IRS (Inland Revenue Service) and that each category of worker receives the correct financial admin paperwork.
You need to properly define whether those working for you are full time, part time, temporary workers or contractors.
There are significant legal and financial consequences through incorrectly classifying workers: the IRS especially are clamping down on certain aspects and there has been much comment on defining these roles.
For example, overuse of classifying workers as contractors when they are devoting all or nearly all of their working hours to one company is seen as an abuse of the tax system.
Sometimes employers do this to avoid having to pay stipulated minimum wages to employees and not having to make deductions from their pay at source.
Time reporting and invoicing
For some employees their salary will be the same each month, but for others it may fluctuate if their working time varies – and contractors’ pay will likely vary too as it’s based on what they bill you.
In order to smooth out these fluctuating payments, ensure reliable time recording and signing off is done. For example, setting up a system for ensuring time sheets are completed and signed off by supervisory staff and passed to accounts in good time for payment runs will help ensure the right payments are made on time. Automated time tracking software can be used to replace manually completing time sheets and supervisor checking.
The same should apply with contractors in pre-sorting their invoices by a certain deadline so they’re checked, signed off and passed for payment in good time.
Reminders
Along with paying staff and other workers reliably, you have other payment related tasks that need completing promptly:
- Provide W-2 forms at the right time for your employees and 1099-MISC forms to non-employees who have worked for you so they can complete their tax returns
- Send payroll tax reports to appropriate jurisdictions
- Submit regular income tax deduction reports
Failure to do these regularly can end up with stiff penalties, fines and – in the case of W-2 and 1099-MISC forms being supplied late – an inability for the people concerned to complete their tax returns.
Modern payroll software
Automating your payroll makes considerable business sense to speed the process up, make it more reliable, more easily customizable, and free up hours spent by staff compared to using and maintaining manual systems.
