There are more than enough ways of reducing the spending on payroll processes. Some are effective in one category of business and some are effective on others. When it comes to payroll it is one of the biggest expenses of the company, as it should be. Employees are the lifeline of a company and so does the amount of work they do for the company.
Even the simplest employee payroll services contain the following aspects:
- Regular Wages
- Benefit Days
- Health Benefits
- Fringe Benefits
And this does not even include the mandatory liabilities like the Medicare taxes and other aspects like social security, federal and state unemployment insurance, local and government taxes and so on.
If we carefully take a look at small businesses, wages make up for 60 to 80 percent of the company spending. No matter what size company you own it is necessary to take control of the expenses the right way and the smart way.
Now, let’s look at some of the major strategies for reducing costs on the payroll.
Outsource Payroll Handling
If you do not currently have a specialized department which has the job of taking care of payroll, then you need to outsource the work.
Any payroll services company with a good reputation will be able to reduce your cost dramatically. The most important reason that payroll service companies reduce the payroll cost is by saving your resources. They perform the whole process in the fraction of time and with their experienced accountant they avoid nearly all common and uncommon mistakes.
When you hire a professional to help in your payroll management you also get the freedom to relax while they do all the hard work for you. The service providers will mitigate all the risks involved in payroll processing. They will eliminate the chances of penalties and they will complete the payroll in a more cost-effective manner.
When it comes to payroll frequency there are enough ways to go around. Depending on the nature of the business the payroll cycle can be repeated daily, weekly, monthly and anywhere in between.
The most important thing when it comes to payroll frequency is to align it with the recurring bills. When you have to take out money from the business treasury it must be recorded. Editing records at uneven intervals can quickly result in a catastrophe.
By aligning you payment cycles with your payroll you can effectively manage your account and take care of the payroll processing more efficiently.
The benefit of a direct deposit is as simple as this, for a check it will cost the company on an average $2 but for a direct deposit, it will be 35 cents.
By eliminating checks from the payroll procession and introducing direct deposits you can save thousands of dollars from the cost.
The benefits of direct deposits precede the simple monthly pay cycle. For those “Employee of the month” bonuses or for successful completion of an insanely difficult task the amount might be given at a random time. By going with direct deposit any of these irregularly occurring amounts can be paid in a jiffy.
Using those Ye older methods of timekeeping will cost you dearly. If you trust your employees then don’t use a timekeeping system at all, we don’t mind. If you need to keep track of your employees, we suggest you use a timekeeping system.
There is a vast variety of timekeeping system available in the market choose the one that best fits your needs.
By going with old methods like a punch card or manual entry, when it comes the time to calculate the pay it takes up a lot of time. If there is an electronic system implemented then it only takes a simple click to get the report ion any and all employees’ attendance.
Employee retention is something that every company struggles with. It is difficult to find people who align with your missions and values and are ready to stick with the company rules and regulations. Nonetheless, employee retention is a must if you want to reduce the cost of payroll.
The loss of finance happens when an employee quits. As soon as an employee quits you start losing time and money which ultimately gets added to the total cost of payroll. Going with a payroll service provider can help you tackle this problem.
When it comes the time to hire a new employee the time taken to set up baking and checking account of the new employee also take up valuable time thus using company resources. These resources hit the amount spend on payroll processing.
The only way to get rid of this problem completely is to increase employee retention rate. Depending on the values and nature of the business this can be done in a number of ways.
Running a content writing business, you can allow writers some leisure as long as they finish their assigned task. For software houses, allowing employees flexible working hours as long they make it to the daily SCRUM meetings on time.
Each business requires its own set of rules and regulation to increase retention it is important to apply the appropriate to avoid unnecessary expenses.
About the Author
Emily David happens to be a talented and experienced digital marketing professional who specializes in finance as well and pursues it as a passion. Being a prolific blogger, she shares her immense knowledge about both these fields through a number of blogs in various topics. Also, she has been associated with Biznavca for the past couple of years; and providing tips and advice to people looking to Payroll services company, Tax adviser, Tax Planning, Chartered accountants.