Making and processing payroll for your employees doesn’t have to be difficult. After all, paying your employees needs to be a priority to prove that you are a profitable business. You want to ensure that the people who work for you can pay their bills and take pride in their daily output.
If you do sweat over making payroll monthly, then fixing this problem should be one of the top items on your to-do list.
What Does Meeting Payroll Mean?
Making or meeting payroll means that you are able to pay your employees and any related taxes while making a positive cash flow regardless of the circumstances. An employee’s salary is part of your business’s fixed costs on a regular basis. You also deduct taxes from their paycheck depending on the paperwork that they sign.
Why do you need to pay? Hiring employees for part-time or full-time work without compensation is illegal and will leave you open to potential civil suits. While you can hire interns for college credit and ask for volunteers, if you’ve signed an agreement to pay employees then you need to honor it.
The film Office Space referenced this worst-case scenario. An employee who was laid off but never notified was still receiving his paycheck and coming to work every day. His supervisor finds out after his paycheck is cut off and uses the opportunity as an excuse to give him more work and worse offices. Eventually, that employee burns down the building and makes off with enough money to fly to Mexico and stay in a nice resort. While real life is never going to be this absurd, you would rather avoid the liability of an angered employee.
What Is Involved With Meeting Payroll?
First is tax paperwork. You need to make sure that employees sign a W-4when they start at your company. Then store the documents in a secure place for tax season. Don’t ask them to redo it over and over again; employees have limited time when they are starting at a new job. Plus they may feel that you are not keeping your record-keeping as they should. You want to show that you are trustworthy. The same goes for verifying Employee Identification Numbers, since they can include Social Security numbers.
Second is tracking all of your incoming revenue and expenses. When you know how much revenue you have to pay for rent, utilities, and employees, you can anticipate if there is a financial hole or a need to use a line of credit. That is why your cash flow statement is very important so that you can decide if you need to liquidate an asset or take a loan from a bank.
The third is creating a regular payroll schedule. Certain programs will let you transfer money automatically on designated days of the month. If you have regular dates, it’s easier to track payments and to identify deficits. You also protect yourself against liability by having pay records on hand.
Streamline Payroll Processing With DeepSky
DeepSky wants to ensure that you can pay all of your employees in the long-term while increasing cash flow. Our Financial Wingman™ will keep you up to date on your finances and ensure that you can reach the next level of profitability. You can keep your employees happy while crunching the numbers.
Reach out to us today to get started. DeepSky will help you maintain a viable set of business bank accounts while improving your cash flow. Let us ensure that you can manage your recordkeeping with ease.