A small business runs on money. The business gathers money in exchange for goods or services, then it sends the money back out into the accounts of its employees. At the heart of a small business is the muscle that pumps its cash flow: payroll.
As tempting as it can be to treat payroll like just another box on a mile-long checklist, payroll practices deserve thoughtful consideration. Payroll sets the tone for the employee relationship. Done well, it can strengthen an employee’s commitment and passion. On the other hand, inconsistent payroll practices can undermine employee trust and lead to costly tax penalties. As the hub of employee data, payroll can also contain powerful business insights. We’ve compiled a few payroll practices that lead to small business success.
Here are three payroll practices that pay:
1. Enriching the Employee Relationship
Since payroll is foundational to the employee relationship, small business owners can use payroll practices to enrich that relationship. As a small business owner, ask yourself, how can I show my employees that I care about them and their livelihood? One free option is to include a personal note with an employee’s paycheck, thanking them for work well done. If you would like to invest more in your employees, consider performance-based bonuses or an annual giveaway.
In 2017, Ultimate Software hosted a campaign called Payroll Counts. During it, they invited employees to nominate a coworker who deserved an extra paycheck. The campaign not only positively impacted the employee who received the money, it also brought out many heartwarming stories about employees and their passion for their work.
2. Confirming Payroll Tax Compliance
Small businesses are at a disadvantage when it comes to payroll tax compliance. While large companies can pay dedicated accountants who follow the frequent changes to tax law, many small business owners are still doing their taxes by hand. It is no wonder that small businesses pay a disproportionate number of payroll tax penalties, with one in every three small businesses incurring at lease one penalty. Avoid the pain of the penalty. Whether you choose to use payroll software or to outsource payroll altogether, you will have peace of mind knowing you are compliant.
3. Diving Into Payroll Data
Payroll data can aid in making important business decisions. The data can be analyzed for trends and aid in setting business goals and deciding on strategies. Consider looking into payroll data before deciding on future salaries and promotions. Payroll data can also be used to evaluate company diversity and compliance. Don’t miss out on insights hidden in your payroll.
Small business owners who look beyond the black-and-white numbers of payroll can find a whole spectrum of possibilities for improving business. Now is the time to enrich your employee relationships, confirm tax compliance, and leverage your payroll data to help your small business succeed.