January 1st is just around the corner, and this time of year I tend to get a lot of calls from business owners and CEO/CFOs looking to outsource their payroll for the first time.
January is a great time to start your payroll outsourcing experience because all payroll tax balances have reset at zero. This minimizes the data that payroll companies have to enter into their system (outstanding payroll tax balances, etc...), and reduces the chance for an error during conversion.
If you have made the decision to outsource I recommend getting the paperwork and set up of your account completed early. There are a lot of companies who begin outsourcing or make a change in providers this time of year and you'd rather be in and done and not caught in a shuffle or near a deadline when your account set up is happening - with so many other accounts being set up simultaneously, quality could be sacrificed.
Schedule a time with the sales representative of your payroll company to be live and on site for the first payroll to help ease the new experience.
Then figure out what revenue generating tasks your going to accomplish with your new free time now that the payroll company is taking the time burden of payroll off your shoulders.
Tuesday, December 13, 2011
Monday, August 1, 2011
How Direct Deposit Saves Business Owners and Employees Money
Have you ever received a check for a really small sum?
Did you cash it?
The other day I received a check for $.36 (not a typo, 36 cents!). It was the first time I remember thinking, 'it would cost me more money to cash this check, than this check is worth.'
How much does it cost your employees to cash their checks?
Math: let's say $3.80 for a gallon of gas today, 2 miles each way to the bank. Let's say 20 minutes door to door (standing in line at the bank or depositing via the ATM). And how much is your employee's time worth (20 minutes, 1/3 of what they make an hour)?
Some banks may charge fees for cashing a check if the employee doesn't bank there (it might be the closest one to the office), or doesn't have the right level of bank account. Also, if it's a deposit, funds may not be available for a few banking days (is rent due this weekend?).
...And how much does it cost you as an employer?
Bankers will tell you, often the only time people stand in line is on pay day. That's every friday, the 1st, 15th, and end of the month, and the next banking day after holidays. That 20 minutes might be more than 20 minutes.
Did they leave on their lunch break?
Will they make it back in time, or are you paying them to wait at the bank?
How much do they earn every 15 minutes, and how much in payroll taxes are you paying to the government on that employee while their away?
There's another option.
If you utilize direct deposit, funds are available on pay day, and no one has to leave the office to cash a paycheck. Offering direct deposit could save yourself and the employee a significant amount of time and money.
Did you cash it?
The other day I received a check for $.36 (not a typo, 36 cents!). It was the first time I remember thinking, 'it would cost me more money to cash this check, than this check is worth.'
How much does it cost your employees to cash their checks?
Math: let's say $3.80 for a gallon of gas today, 2 miles each way to the bank. Let's say 20 minutes door to door (standing in line at the bank or depositing via the ATM). And how much is your employee's time worth (20 minutes, 1/3 of what they make an hour)?
Some banks may charge fees for cashing a check if the employee doesn't bank there (it might be the closest one to the office), or doesn't have the right level of bank account. Also, if it's a deposit, funds may not be available for a few banking days (is rent due this weekend?).
...And how much does it cost you as an employer?
Bankers will tell you, often the only time people stand in line is on pay day. That's every friday, the 1st, 15th, and end of the month, and the next banking day after holidays. That 20 minutes might be more than 20 minutes.
Did they leave on their lunch break?
Will they make it back in time, or are you paying them to wait at the bank?
How much do they earn every 15 minutes, and how much in payroll taxes are you paying to the government on that employee while their away?
There's another option.
If you utilize direct deposit, funds are available on pay day, and no one has to leave the office to cash a paycheck. Offering direct deposit could save yourself and the employee a significant amount of time and money.
Saturday, May 28, 2011
How to Understand Employee Labor Costs for a Small Business
The other day I was sitting in on a consulting session with a group of new restaurant owners who were sampling ingredients that would potentially make up their restaurant's new panini sandwiches. The group was comprised of approximately five or six people, only one of whom had extensive experience in the restaurant industry.
All of them, however, had experience in business. And one thing they understood was the cost to make the sandwich included more than just bread, lettuce, and other food ingredients.
The employee cutting the bread, slicing the tomatoes, and preparing the sandwich must also be paid, as do the IRS and State governments on employer taxes.
Dividing your employee's hourly wage plus employer taxes by 60 (as in minutes), you'll be able to understand your labor cost per minute. Knowing that it takes five minutes to make your special Chicken Caesar panini, you can add your labor cost for that time to your ingredients to get a better understanding of the your cost of that tasty sandwich. You'll have a better grip on price setting this way too, as, due to your costs, maybe charging $7.99 is more appropriate than $6.99.
Unless, of course, you're in the airport, where $14.99 seems to be appropriate:)
All of them, however, had experience in business. And one thing they understood was the cost to make the sandwich included more than just bread, lettuce, and other food ingredients.
The employee cutting the bread, slicing the tomatoes, and preparing the sandwich must also be paid, as do the IRS and State governments on employer taxes.
Dividing your employee's hourly wage plus employer taxes by 60 (as in minutes), you'll be able to understand your labor cost per minute. Knowing that it takes five minutes to make your special Chicken Caesar panini, you can add your labor cost for that time to your ingredients to get a better understanding of the your cost of that tasty sandwich. You'll have a better grip on price setting this way too, as, due to your costs, maybe charging $7.99 is more appropriate than $6.99.
Unless, of course, you're in the airport, where $14.99 seems to be appropriate:)
Sunday, February 6, 2011
How to Choose How Often to Pay Your Employees
How often employees are paid within their company is known as their pay frequency, and how yours is set could contribute to something most small business owners dread...employee turnover.
Pay frequencies are typically scheduled weekly, bi-weekly (every two weeks), semi-monthly (twice a month), or monthly. Some other special circumstances enable pay frequencies outside of these, such as quarterly and others, but most non-owner, non-corporate officer employees, will fall in the weekly to monthly range.
As an employer, hiring on your first employee, you have the opportunity to set your pay frequency (which can later be changed) - but here a few things to consider:
Some states mandate weekly pay for employees within certain job categories, such as manual labor, and not abiding by these rules could result in penalties. Why is this?
And Why are payday loans popular?
Cash flow is extremely important to small business owners, but just as important to the households of employees. Think processing your company's payroll twice a month versus weekly is a good idea because it could be slightly cheaper with your payroll company? Or maybe it's easier on your schedule? It might be pressuring employees to look for other employment.
Believe it or not, it's very common within the medical staffing industry to offer employees daily pay. Nurses and other medical professionals have switched from one staffing company to another simply because they can get their pay daily instead of at the end of the week.
Turnover may not be a case where employees aren't being paid enough - just not often enough.
None of this means that you should pay your employees every day or even every week, but it's important to note. The cost of an employee leaving the company could far exceed the cost or time savings of a less frequent pay schedule.
Ultimately, choosing a company pay frequency likely comes down to the types of employees you'll be employing. Don't be afraid to look at pay frequency as a retention tool, as believing the opposite (that it doesn't matter), could potentially cost you employees.
Pay frequencies are typically scheduled weekly, bi-weekly (every two weeks), semi-monthly (twice a month), or monthly. Some other special circumstances enable pay frequencies outside of these, such as quarterly and others, but most non-owner, non-corporate officer employees, will fall in the weekly to monthly range.
As an employer, hiring on your first employee, you have the opportunity to set your pay frequency (which can later be changed) - but here a few things to consider:
Some states mandate weekly pay for employees within certain job categories, such as manual labor, and not abiding by these rules could result in penalties. Why is this?
And Why are payday loans popular?
Cash flow is extremely important to small business owners, but just as important to the households of employees. Think processing your company's payroll twice a month versus weekly is a good idea because it could be slightly cheaper with your payroll company? Or maybe it's easier on your schedule? It might be pressuring employees to look for other employment.
Believe it or not, it's very common within the medical staffing industry to offer employees daily pay. Nurses and other medical professionals have switched from one staffing company to another simply because they can get their pay daily instead of at the end of the week.
Turnover may not be a case where employees aren't being paid enough - just not often enough.
None of this means that you should pay your employees every day or even every week, but it's important to note. The cost of an employee leaving the company could far exceed the cost or time savings of a less frequent pay schedule.
Ultimately, choosing a company pay frequency likely comes down to the types of employees you'll be employing. Don't be afraid to look at pay frequency as a retention tool, as believing the opposite (that it doesn't matter), could potentially cost you employees.
Tuesday, February 1, 2011
Preventing Payroll Fraud When Using a Payroll Company
The court case outlined in the link below deals with the issue of liability when payroll fraud is attempted when using a payroll company.
Is this case, the payroll manager at a small business would call in the company payroll to the payroll company. The payroll manager would call in multiple payrolls each week (instead of just the one normal payroll), and issue herself multiple direct deposits. The payroll company was not liable to reject the payroll manager's request since she was listed as a contact on the account who could call in payroll.
The business tried suing the payroll company for the amount the business' payroll manager embezzled through payroll fraud.
The court found that the payroll company was not liable as they had issued financial payroll reports to the company and that the company owner did not review the reports for discrepancies.
The opportunity for payroll fraud can be more limited when using an outside payroll company because of these payroll reports. Payroll reports from in-house systems have the potential to be modified (a payroll check issued and then wiped off or left out of the payroll reports). Payroll reports from payroll companies are canned - so when an employee gets two pay checks it will be there in plain sight.
Most payroll companies can have reports courier delivered and received by signature only. They can also separate the reports from the live checks and have them delivered to separate locations. Even one step further, some payroll companies can deliver electronic copies of the reports via email.
One or all of these options could be taken by the owner/CEO/CFO of the company as a checks and balances system to eliminate these kinds of payroll fraud opportunities from happening - provided the reports are reviewed, of course.
Subscribe to:
Posts (Atom)