{"id":4236,"date":"2024-01-09T15:08:00","date_gmt":"2024-01-09T20:08:00","guid":{"rendered":"https:\/\/primepay.com\/blog\/top-10-payroll-tips-for-businesses\/"},"modified":"2025-11-26T12:26:51","modified_gmt":"2025-11-26T17:26:51","slug":"top-10-payroll-tips-for-businesses","status":"publish","type":"post","link":"https:\/\/primepay.com\/blog\/top-10-payroll-tips-for-businesses\/","title":{"rendered":"10 Payroll Tips Every Business Should Know"},"content":{"rendered":"\n<p><span style=\"font-weight: 400;\">According to <\/span><a href=\"https:\/\/www.irs.gov\/statistics\/collections-activities-penalties-and-appeals\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">IRS estimates<\/span><\/a><span style=\"font-weight: 400;\">, one-third of organizations make at least one payroll error a year. The consequence isn\u2019t just fixing mistakes (although you should do that, too). Payroll errors also lead to fines \u2013 $7 billion in 2021, to be exact.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">It\u2019s no wonder <\/span><a href=\"https:\/\/www.prnewswire.com\/news-releases\/new-infographic-the-burden-of-small-business-accounting-taxes-and-payroll-300026479.html\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">40% of small business owners<\/span><\/a><span style=\"font-weight: 400;\"> believe managing payroll and taxes is the worst part of owning their business.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Whether you\u2019re a company of 10 or 10,000 employees, getting payroll right every time is critical. That means adhering to payroll best practices, such as developing a solid compensation plan, maintaining compliance, and paying people equitably.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Below are ten payroll tips to know so you can plan and manage payroll confidently.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">10 Tips to Manage Payroll for Small Businesses<\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-one\"><span style=\"font-weight: 400;\">1. Put a Payroll Policy in Place<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Want to avoid disorganized and inefficient processes? Start by putting a payroll policy in place. In short, a payroll policy serves as a single source of truth that payroll administrators can follow. Moreover, it provides preferred guidelines so your team can accomplish payroll tasks accurately and efficiently.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">That last part \u2013 efficiency \u2013 is a game-changer when managing payroll. <\/span><a href=\"https:\/\/news.bloombergtax.com\/payroll\/survey-small-business-owners-misjudge-time-to-prep-payroll\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">According to Score<\/span><\/a><span style=\"font-weight: 400;\">, a mentoring service for businesses, 63% of small business owners underestimate the time payroll takes. As a result, leaders must shift priorities and potentially miss other deadlines to file payroll on time. It\u2019s no wonder 50% of owners think this process is frustrating.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Thus, when constructing your payroll policy, assess the process, time, and resources needed to draft your plan and pay your people each month.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Consider including the following:&nbsp;<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">An outline of the payroll process<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Employee classification specifications<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Determining factors for salaries and wages<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Reporting obligations for employees<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Instructions and procedures for resolving payroll mistakes<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Levels of earnable vacation time\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Guidelines on how to calculate wages and promotions<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-two\"><span style=\"font-weight: 400;\">2. Set a Payroll Budget&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Payroll expenses shouldn\u2019t be a surprise. Plan salaries, bonuses, and other payroll expenses accordingly so you have the proper financial runway needed to compensate employees.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Employers are also legally responsible for certain <\/span><a href=\"https:\/\/www.irs.gov\/taxtopics\/tc756\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">employment taxes<\/span><\/a><span style=\"font-weight: 400;\">, such as Social Security and Medicare. For example, employers must match the Social Security and Medicare deductions from an employee&#8217;s compensation, which amounts to 7.65% of gross pay and the employee&#8217;s salary or hourly wage. Payroll taxes vary by state, so it\u2019s critical to consider this information when budgeting.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">To ensure that the spending won&#8217;t harm the company&#8217;s finances, budget by <\/span><span style=\"font-weight: 400;\">calculating overall payroll costs<\/span><span style=\"font-weight: 400;\"> as a proportion of revenue.<\/span><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img loading=\"lazy\" decoding=\"async\" width=\"1920\" height=\"1059\" src=\"https:\/\/primepay.com\/wp-content\/uploads\/best-payroll-software-primepay.jpg\" alt=\"primepay software screenshot review payroll\" class=\"wp-image-4191\" title=\"\" srcset=\"https:\/\/primepay.com\/wp-content\/uploads\/best-payroll-software-primepay.jpg 1920w, https:\/\/primepay.com\/wp-content\/uploads\/best-payroll-software-primepay-768x424.jpg 768w, https:\/\/primepay.com\/wp-content\/uploads\/best-payroll-software-primepay-1536x847.jpg 1536w\" sizes=\"auto, (max-width: 1920px) 100vw, 1920px\" \/><\/figure>\n<\/div>\n\n\n<p><\/p>\n\n\n\n<p class=\"has-text-align-center\"><i><span style=\"font-weight: 400;\">No more crunching numbers or using rough estimates \u2013 payroll software takes the guesswork out of payroll totals and deductions.&nbsp;<\/span><\/i><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-three\"><span style=\"font-weight: 400;\">3. Accurately Categorize Employees&nbsp;<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">One crucial piece of payroll advice is to cross your t\u2019s and dot your i\u2019s. More specifically, you want to double (or triple) check everything, including accurately classifying your people.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Misclassifying people as employees or independent contractors is more common than you think. The <\/span><a href=\"https:\/\/www.epi.org\/publication\/independent-contractor-misclassification\/#_ref1\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Economic Policy Institute<\/span><\/a><span style=\"font-weight: 400;\"> estimates that 10-20% of employers misclassify at least one employee.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-size: 1em;\">Proper classifications are important since state and federal agencies use tax revenue (income, Social Security, Medicare, and unemployment taxes) to provide public services and benefits.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Once you\u2019ve accurately classified workers as employees, you should further categorize them by <\/span><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/fact-sheets\/17a-overtime\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">hourly or salaried<\/span><\/a><span style=\"font-weight: 400;\"> employment. From a legal standpoint, you\u2019ll need to know that:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Hourly employees are entitled to protection under the <\/span><a href=\"https:\/\/www.dol.gov\/agencies\/whd\/flsa\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Fair Labor Standards Act (FLSA)<\/span><\/a><span style=\"font-weight: 400;\"> and must receive overtime pay if they work more than 40 hours per week.<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Salaried employees may not be subject to FLSA overtime regulations.<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-four\"><span style=\"font-weight: 400;\">4. Develop a Payroll Calendar<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Establishing a consistent payroll schedule ensures timely payments and provides predictability for finance teams and employees. Creating and maintaining a payroll calendar will help finance teams better handle unforeseen events, minimize errors, and enhance employee satisfaction with the service provided.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">One payroll tip (that may sound old-school) is to keep a visual calendar. Visual calendars help you better anticipate the ongoing monthly payroll process stages and encourage you to identify upcoming federal holidays for an altered <\/span><a href=\"https:\/\/primepay.com\/blog\/how-federal-holidays-affect-payroll\/\" rel=\"noopener\"><span style=\"font-weight: 400;\">holiday pay schedule<\/span><\/a><span style=\"font-weight: 400;\">.&nbsp;<\/span><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"636\" src=\"https:\/\/primepay.com\/wp-content\/uploads\/Payroll_1_2_3-1024x636-1.png\" alt=\"primepay software screenshot with scheduling fuctionality\" class=\"wp-image-1998\" title=\"\" srcset=\"https:\/\/primepay.com\/wp-content\/uploads\/Payroll_1_2_3-1024x636-1.png 1024w, https:\/\/primepay.com\/wp-content\/uploads\/Payroll_1_2_3-1024x636-1-768x477.png 768w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<p><\/p>\n\n\n\n<p class=\"has-text-align-center\"><i><span style=\"font-weight: 400;\">Payroll software with scheduling functionalities lets you channel your best late-night infomercial impression \u2013 just set it and forget it.&nbsp;<\/span><\/i><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-five\"><span style=\"font-weight: 400;\">5. Educate Employees on Payroll Procedures<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Another payroll best practice is to train and educate employees on payroll procedures. Finance teams should understand responsibilities and deadlines thoroughly and provide continuous training on the latest regulations, software updates, and payroll best practices.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Additionally, employees should know how to submit timesheets and update personal information. To mitigate frequent questions, make your payroll policy and supporting documents easily accessible. Consider:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><span style=\"font-weight: 400;\">Discussing payroll procedures in All-Hands or Town Hall meetings so everyone receives the same information and message.\u00a0<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Uploading documents to the company intranet or self-service portal for easy access at any time. <\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-six\"><span style=\"font-weight: 400;\">6. Maintain Proper Compliance<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Payroll and compliance go hand in hand. Therefore, you must abide by all federal, state, and local laws regarding employee compensation.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Keep the agencies that regulate payroll laws \u2013 the <\/span><a href=\"https:\/\/www.irs.gov\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Internal Revenue Service <\/span><\/a><span style=\"font-weight: 400;\">(IRS) and the <\/span><a href=\"https:\/\/www.dol.gov\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Department of Labor <\/span><\/a><span style=\"font-weight: 400;\">(DOL) \u2013 top of mind and understand <\/span><a href=\"https:\/\/www.dol.gov\/general\/aboutdol\/majorlaws\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">payroll laws and regulations<\/span><\/a><span style=\"font-weight: 400;\">.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Some payroll laws to consider are:<\/span><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"\/hr-glossary\/flsa-status\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Fair Labor Standards Act (FLSA)<\/span><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/primepay.com\/learn\/payroll\/your-guide-to-fica-tip-tax-credit\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Federal Insurance Contributions Act (FICA)<\/span><\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/primepay.com\/learn\/payroll\/futa-overview-calculations\/\"><span style=\"font-weight: 400;\">Federal Unemployment Tax Act (FUTA)<\/span><\/a><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Equal Pay Act (EPA)<\/span><\/li>\n\n\n\n<li><span style=\"font-weight: 400;\">Workers\u2019 Compensation<\/span><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-seven\"><span style=\"font-weight: 400;\">7. Conduct Regular Audits<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">When was the last time you audited your compensation strategy and payroll process? If it\u2019s been more than 12 months, add it to your to-do list. Regular audits of employee classifications, tax withholdings, and benefit calculations help finance teams identify and rectify errors promptly.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">But in addition to auditing for accuracy, it\u2019s essential to analyze your current compensation strategy. Run reports to spot any trends or opportunities for improvement. A<\/span><i><span style=\"font-weight: 400;\">re specific demographics receiving more promotions than others? Are new hires earning more than seasoned employees?<\/span><\/i><span style=\"font-weight: 400;\">&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">This payroll advice contributes to not only the company\u2019s financial health but also its organizational health. Regular auditing practices help ensure fair and equitable compensation across teams, foster employee trust, and promote transparency.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-eight\"><span style=\"font-weight: 400;\">8. Equip Employees With a Self-Service Portal<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">We\u2019re all guilty of sending the \u201cwhere does that information live, again?\u201d email. And it makes sense, as the average company has <\/span><span style=\"font-weight: 400;\">15-35 different tools<\/span><span style=\"font-weight: 400;\"> in their HR tech stack.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">One solution to the constant back-and-forth is to equip your people with an employee self-service portal. With one login, employees can access pay stubs, tax documents, PTO, time sheets, and other personal information.&nbsp;<\/span><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img loading=\"lazy\" decoding=\"async\" width=\"1600\" height=\"1029\" src=\"https:\/\/primepay.com\/wp-content\/uploads\/2406_PrimePay_Homepage_Dashboard_NDS.png\" alt=\"primepay hr dashboard screen capture\" class=\"wp-image-2312\" title=\"\" srcset=\"https:\/\/primepay.com\/wp-content\/uploads\/2406_PrimePay_Homepage_Dashboard_NDS.png 1600w, https:\/\/primepay.com\/wp-content\/uploads\/2406_PrimePay_Homepage_Dashboard_NDS-768x494.png 768w, https:\/\/primepay.com\/wp-content\/uploads\/2406_PrimePay_Homepage_Dashboard_NDS-1536x988.png 1536w\" sizes=\"auto, (max-width: 1600px) 100vw, 1600px\" \/><\/figure>\n<\/div>\n\n\n<p><\/p>\n\n\n\n<p class=\"has-text-align-center\"><i><span style=\"font-weight: 400;\">With the right software, employees can access company resources, complete tax forms, enroll in direct deposit, and elect benefits, all in one place.<\/span><\/i><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-nine\"><span style=\"font-weight: 400;\">9. Prepare for Year-End Reporting<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">Plan for <\/span><a href=\"\/blog\/year-end-payroll-checklist-for-businesses\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">year-end reporting<\/span><\/a><span style=\"font-weight: 400;\"> requirements, including W-2 and 1099 forms, to avoid last-minute hassles and prevent potential issues with tax authorities.<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Besides adhering to government requirements, there\u2019s another reason to prepare your year-end reports: sound decision-making. When you have a clear and precise financial picture of the business, you can accurately plan for headcount, bonuses, and other financial decisions that align with your strategic goals.&nbsp;<\/span><\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"jump-link-ten\"><span style=\"font-weight: 400;\">10. Invest in Reliable Payroll Software<\/span><\/h3>\n\n\n\n<p><span style=\"font-weight: 400;\">You <\/span><i><span style=\"font-weight: 400;\">could<\/span><\/i><span style=\"font-weight: 400;\"> spend five hours a month managing payroll, checking state and federal updates, chasing down missing information on time cards, and double-checking every data entry. But the better way is to invest in <a href=\"https:\/\/primepay.com\/software\/payroll\/\">reliable software for payroll<\/a> that handles payroll complexities so you don\u2019t have to.\u00a0<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Payroll software automates calculating and distributing employee salaries, taxes, and other compensation-related activities. It also ensures accurate and timely employee payment while managing deductions, benefits, and tax compliance. These benefits aren\u2019t just helpful for finance teams; they\u2019re also critical for employees. Because <\/span><a href=\"https:\/\/www.ukg.com\/blog\/workforce-institute\/82-million-us-workers-experienced-paycheck-errors\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">58% of people<\/span><\/a><span style=\"font-weight: 400;\"> live paycheck-to-paycheck, they can\u2019t afford to wait on fixed payroll errors.&nbsp;<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">If you\u2019re in the market, consider payroll software that includes employee time management and HR capabilities. Why? Having connected time will remove the need for manual timesheet entry, which is prone to errors, and HR software centralizes all your data in one place so you can make the best decisions for your business and people.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">Manage Payroll Like a Pro<\/span><\/h2>\n\n\n\n<p><span style=\"font-weight: 400;\">The payroll best practices above aren&#8217;t just steps \u2013 they&#8217;re a roadmap to transform payroll processes from status quo to exemplary. <\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">Embrace scalable solutions, empower employees with self-service portals, and stay proactive with regular audits and staff training.\u00a0<\/span><\/p>\n\n\n\n<p><span style=\"font-weight: 400;\">By doing so, you&#8217;re not just managing payroll; you&#8217;re setting the stage for growth, fostering employee satisfaction, and ensuring your organization thrives in the long run.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>According to IRS estimates, one-third of organizations make at least one payroll error a year. The consequence isn\u2019t just fixing mistakes (although you should do that, too). Payroll errors also lead to fines \u2013 $7 billion in 2021, to be exact.&nbsp; It\u2019s no wonder 40% of small business owners believe managing payroll and taxes is [&hellip;]<\/p>\n","protected":false},"author":44,"featured_media":4240,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","footnotes":""},"categories":[15],"tags":[],"class_list":["post-4236","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-payroll-tax"],"acf":[],"_links":{"self":[{"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/posts\/4236","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/comments?post=4236"}],"version-history":[{"count":2,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/posts\/4236\/revisions"}],"predecessor-version":[{"id":9012,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/posts\/4236\/revisions\/9012"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/media\/4240"}],"wp:attachment":[{"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/media?parent=4236"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/categories?post=4236"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/primepay.com\/wp-json\/wp\/v2\/tags?post=4236"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}