The Principles of Payroll Management

Pay your employees fairly, and they will come through for you when you need them.

Effective payroll management involves paying your employees on time and keeping track of the taxes you accrue. To successfully manage your payroll you must also use your human resources efficiently, not paying for more hours than you need while also making sure that your workers receive enough income to support themselves.

Prompt And Fair Payroll

Pay your workers on time, and make sure there is always enough money in your bank account to cover their paychecks. Many corporations delay worker paychecks, keeping a lag time of one to two weeks between the end of the pay period and the day they distribute the checks. This policy provides the short-term benefit of easier cash flow (at least initially) but you are still liable for the taxes you delay. Allowing minimal delay between the end of a pay period and the time you pay your wages improves employee loyalty.

Payroll Taxes

You must regularly withhold state and federal payroll taxes from your employees' paychecks. These include Social Security and Medicare taxes, and federal income tax, as well as state income tax and your employees' share of your industrial insurance tax, depending on the state where you live. In addition, you are liable for employment taxes such as your employers' share of Social Security and Medicare taxes, as well as industrial insurance and unemployment insurance taxes. Depending on your total tax liability, you may only need to pay these taxes every few months. Nonetheless, it is essential to keep track of the amounts you accrue so you are not surprised at tax time.

Managing Employee Hours

The fewer hours your employees work, the less your payroll and payroll tax liabilities, and the more profit you earn. But you can also lose money if you are understaffed at critical times, such as if you are unable to meet customer demand. Successful payroll management involves avoiding redundancies while also making sure that you have sufficient staff to complete all necessary tasks.

Meeting Employee Needs

Although you save money by keeping your payroll low, you must also pay your employees enough and make sure they have enough hours that they will continue to work for you. Sometimes it even makes sense to keep your company somewhat overstaffed to meet your employees' needs so that they can also meet yours. Successful payroll management involves striking a healthy balance between reducing costs and maintaining a consistent enough schedule to meet your employees' financial needs.

References

• American Payroll Association
• IRS.gov: Employers' Tax Guide
• Payroll Taxes.com: Federal and State Payroll, Tax and Labor Links