financial bookkeeping tips for contractors

New Employer? 5 Steps To Choose The Right Payroll Schedule

The timing of your payroll is a valuable consideration not just for employees but also for the employer. Taking too long can be detrimental to retaining good staff and meeting your obligations. However, a short payroll schedule can put a burden on the company. How can you find the right timing for each step of your process? Here are a few steps to figure it out. 

1. Check Regulations. State and federal law governs the parameters of how payroll is handled. Your state, for instance, may stipulate the maximum number of days that are permitted between pay dates as well as how many days are allowed between the end of the payroll period and the pay date. 

2. Consider Staffing. Payroll work can take a significant amount of time for your staff. Shorter pay periods have less buffer time for something to go wrong. If you commit to a weekly payroll, for example, staff will need to collect time, verify and approve it, enter the data, and print or hand out checks every week on certain days. Decide honestly if your staff can ensure this happens consistently. Generally, the longer between paychecks, the easier it will be on the company.

3. Look for Industry Standards. Some types of business tend to have similar pay schedules. For instance, a retail business with lots of turnover may commonly pay on a weekly or bi-weekly schedule. An office-based business, on the other hand, may find that most employees are used to a semi-monthly or even monthly pay schedule. If you match industry expectations, employees will be more understanding. 

4. Plan for Cash Flow. Employees usually prefer a tight turnaround on pay, but the company must also be able to comfortably have the funds available every time payday arrives. Failure to do so can result in employee problems and even legal issues. So, talk with your accountant about cash flow before committing to any particular pay dates. 

5. Create a Workflow. Once you know the pay schedule, work backward to draft a workflow process. For instance, if payday is on the 1st, determine how many days the payroll service needs, how many days data entry will take, and how many days you must give managers to approve time. This aids you in arriving at the date to end your pay period. Distribute this process in written form to all employees. 

When you research your employer responsibilities, consider both employer and employees, and put the payroll process in writing, the result will be a workable plan that benefits everyone. Need more information about your options? Start by meeting with a payroll processing service in your industry. 

About Me

financial bookkeeping tips for contractors

As a renovation contractor, I have a lot of things to worry about each day. I have to think about my customers, my business, the insurance I need and even the employees that I have working for me. All of these things keep me busy enough without having to worry about keeping up with my financial bookkeeping each day. How do you keep up with the financial bookkeeping so that you don't make any errors that could cost you a whole lot of money? I have worked with my accountant to develop a process that has helped me and I have shared the tips he has taught me right here on my blog to help you.

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