19+ Expert Payroll Tips, Tricks, & Strategies to Use in 2024

Payroll is considered one of the most fundamental aspects of running and maintaining a business. Therefore, taking payroll tips now and then would benefit your venture, whether you own a corporation or a small and humble startup.

More importantly, keeping your payroll process in check lets you pinpoint inconsistencies, resolve them, and adapt to newer, more efficient payroll management strategies.

Are you curious to expand your payroll knowledge and find ways to manage your employees’ salaries, benefits, and company expenses? Read on for some much-needed payroll tips and tricks!

Key Takeaways

• Payroll encompasses employees’ salaries and wages, benefits, and attendance. It also includes a company’s operational expenses, tax obligations, and other accruals.
• Some of the most helpful payroll tips for small businesses include setting up a payroll calendar, choosing a pay cycle, classifying their staff, and setting up a payroll budget.
• Companies with a more extensive budget may consider hiring tax and payroll professionals or using payroll software to improve productivity.
• Payroll tips that apply to all businesses include implementing a simple payroll policy, following federal and state labor and tax regulations, acquiring an EIN, periodically auditing expenses, and asking employees for constructive feedback.

19+ Expert Payroll Tips You Should Know About

The payroll tips we’ve compiled below focus on managing payroll effectively without draining your wallet or exhausting your resources.

#1. Decide How You’ll Pay Employees

Depending on whether you pay employees hourly or at a flat rate, there are specific labor regulations to follow. Hourly workers earn less annually than employees paid a fixed or flat rate, making them eligible for overtime compensation, as the Fair Labor Standards Act (FLSA) mandates.

Conversely, if you pay your employees a fixed rate, you must create a program that grants them paid time off since they do not qualify for the FLSA’s overtime pay coverage.

Note that deciding whether to pay your employees hourly also depends on the nature of their work or the services you offer.

#2. Determine How Often You’ll Pay Employees

Once you’ve determined how to compensate your workers, the next thing to consider is how frequently you’ll pay them. Choosing a payroll cycle for your staff is crucial because it sets the pace of your payroll and budgeting process.

Paying employees weekly is ideal if you have 50 employees or fewer, but it might cost you more. A biweekly pay cycle is less expensive and offers more leeway to minimize mistakes in calculating salaries.

But if you have a larger workforce, you should consider a semi-monthly or monthly pay cycle instead. A semi-monthly payroll is similar to a biweekly cycle in that you pay your workers twice a month.

The only difference is that you disburse salaries on the same date in a semi-monthly cycle, which either falls on the first and the 15th or the 15th and the 31st of the month. A biweekly payroll pays employees on the same day or every other Friday.

#3. Set a Payroll Budget

Setting aside a budget for your company’s payroll is a must-have tip for any business.

Your payroll expenses encompass all other aspects of your financial health. They include your employees’ salaries, your business and employees’ taxes, and accumulated interests and costs.

To ensure you set aside enough budget for your payroll costs, calculate all payroll-related expenses as a portion of your business’s revenue. This will help you assess the correct percentage to allot for your specific payroll needs.

#4. Create a Payroll Calendar

Creating a payroll calendar establishes a structure for your payroll management process. However, mapping out your payroll's different factors and costs is not enough. You must also keep track of specific deadlines regarding your payroll.

Some important payroll deadlines include the due dates for filing your taxes and sending W-2 forms or 1099 forms to your workers. Your calendar must also align with your pay cycle.

Here’s a simple yet helpful payroll tip: Set calendar alerts for all the essential deadlines for processing employee wages and business costs and filing the necessary paperwork. Also, keep your payroll and HR departments in the loop for any changes in your pay schedule.

#5. Stay Up-To-Date With Labor Laws and Regulations

Federal, state, and local regulations on payroll processing may or may not vary depending on your business’s location. These variations across states include minimum wage laws, overtime rates, meal and rest breaks, and implementing (or not) SUTA taxes.

Unsurprisingly, tax-related inquiries are among startups' and new business owners' most common payroll questions. Here are a few examples of the different tax and payroll laws in each state:

In California, the minimum wage rate is $16.00, while in Minnesota, the rate starts at $10.85 per hour for larger companies and $.8.85 per hour for small businesses.

When implementing SUTA, most states only impose the said tax on employers except for Alaska, New Jersey, and Pennsylvania.

Federally, the IRS sets new tax rates for each tax bracket every year. The IRS’s existing tax filing regulations are also subject to change, so visiting their website regularly for updates would be beneficial.

#6. Put a Simple Payroll Policy in Place

Most businesses often underestimate the standard payroll tip, which focuses on the advantages of a simple payroll policy.

A straightforward guideline makes it easier for your staff to follow through and understand your payroll process. Be transparent with your policies and procedures for providing employee benefits and wages.

Define when and how employees can expect to receive their hard-earned money. If some employees qualify for specific benefits, such as overtime compensation, paid time off, or salary adjustments, explain the governing policies thoroughly.

It would also be ideal to create an employee handbook or guideline where you can enumerate and explain the full scope of your payroll guidelines.

You can include brief but concise explanations about payroll codes for your accounting staff, elaborate on the company’s rewards and incentive programs, and even enumerate your criteria for a quarterly or annual performance evaluation. Additionally, it’s also recommended to prepare physical and digital copies to make your policies accessible to your staff.

#7. Classify Your Employees

Classifying your employees means identifying whether you hired them as W-2 employees or independent contractors.

By categorizing each worker your business hires, you can prepare the correct tax forms, help them report their income, and update your payroll accordingly.

W-2 employees can either be salaried personnel or workers paid hourly.

They are employed in your company as regular workers. At the same time, you share the responsibility of withholding federal and state taxes and monitoring their contributions to health insurance and retirement accounts.

Conversely, independent contractors or freelancers are workers you hire for project-based and short-term services. You are not obligated to oversee their tax and benefit deductions.

Once the freelancers have fulfilled the tasks they were hired to do, you must pay them in full and send their 1099-NEC forms before January 31st of the following year to complete your end of the bargain.

#8. Use Time Tracking Software for Your Employees

One of the most cost-efficient payroll tips for small businesses involves using time-tracking software. It allows you to monitor your staff’s attendance and accurately record their workday hours.

With a reliable method of tracking employee hours, it will be easier to calculate salaries and update theremaining paid time off for each worker.

If an employee is notoriously late to their shift, you may consider that undertime and decide whether to deduct the missing hours from their salary or address their tardiness.

Similarly, for employees who work overtime, you must compensate for their extra work hours accordingly. When offering paid time off (PTO), tracking employee attendance includes monitoring their remaining PTO.

#9. Acquire an Employer Identification Number for Your Business

This next payroll tip is crucial, especially for new businesses and entrepreneurs. Registering for an employer identification number (EIN) is necessary if you hire workers or employees. Acquiring an EIN is a must, even if you only have one employee.

Your EIN is instrumental in monitoring your business’s income and payroll tax payments. It also ensures your compliance with all tax and employment regulations.

You can start the application process with the IRS by mail, phone, or fax to register for an employee identification number. Alternatively, you may also visit the IRS website and register online.

#10. Look for Payroll Software and Online Tools to Boost Efficiency

Finding a payroll or bookkeeping software to help you manage your payroll management responsibilities is a practical payroll tip for companies with a limited workforce. The key is automating repetitive steps in preparing payroll to save time and energy.

When choosing payroll software, remember your budget, specific payroll needs, and the number of employees you have. Look for software that offers basic payroll services at affordable rates and allows you to purchase additional services later.

Aside from payroll software, there are also secure online tools like Paystub.org’s software. Our pay stub generator uses pay stub templates and a built-in calculator to help you generate pay slips with complete and accurate information instantly.

We also offer 1099 and W-2 form generators, which may come in handy for your employees and hired contractors' tax filings.

#11. Pay Your Employees via Direct Deposit

A not-so-common payroll tip is to use direct deposit to pay employees. Direct deposit entails sending salaries and wages directly and automatically to their bank accounts. It is an ideal and cost-efficient way to pay employees because you can integrate it with your online payroll tools.

Some businesses upload electronic or paperless pay stub copies into their HR portal, making the document accessible to their staff. As such, the staff can double-check their wages and salaries and track their benefits and employment records as needed.

Using digital paper checks when distributing salaries via direct deposit is also more secure than preparing paper paychecks. Furthermore, direct deposit payments are convenient for both regular workers and freelancers.

#12. Manage Employee Benefits

As a business owner, you must have sufficient knowledge about the benefits offered to your employees.

That means getting familiar with the different plans included in your healthcare or life insurance benefits and understanding how deductibles and premiums work.

It is also your responsibility to explain thoroughly how the benefits work to your employees. Inform them about the different ways they can qualify for a premium plan or add dependents.

#13. Calculate Your Accruals

Some businesses use the accrual accounting method, in which employers or business owners document their expenses and revenues before fulfilling the necessary payments.

Additionally, calculating accrued payroll gives insight into your company’s budget and operational costs in the succeeding quarters of the year.

Whether accounting for one-time accruals, one-time deductions, or periodic accruals, the key is to include all liabilities and expected payments in your payroll calendar. This will help you effectively manage your business expenses and avoid bankruptcy.

#14. Verify Your Payroll Submissions

Make it a habit to review and verify all completed payroll submissions. You can use payroll software for this or have your payroll staff compare your last completed payroll with your most recent one.

Most payroll errors result fromunverified information or data in employees’ paycheck records or the company’s expense report. Even if you manage to resolve these errors, that does not change the fact that you have already wasted time and resources.

Remember, a single mistake could mean repeating your payroll process from the start. Besides that, it could make you liable for miscalculating your workers’ wages.

#15. Get New Employees to Fulfill Their Payroll Paperwork

A helpful payroll tip for employers with newly hired staff is to ensure your new employees fulfill all documents or paperwork related to their payroll. Their pay-related documents include submitting an updated Form W-4.

W-4 forms that are up-to-date with your new hire’s filing status, number of dependents, and tax bracket yield the correct tax amount to withhold from their earnings. In addition to their Form W-4, your recruits must specify whether they qualify for specific government benefits.

As an employer, you must also cooperate with your new hires to fulfill their Form I-9 or Employment Eligibility Verification. It’s mandatory for all newly hired employees and certifies that they are legally authorized to work in the US.

#16. Implement Periodic Auditing

Periodic auditing may seem tedious, but it is the key to generating comprehensive and precise payroll reports. Set quarterly meetings with your payroll managers and HR staff to discuss any issues or hurdles they may have faced while managing payroll for the last pay periods.

Consistently auditing your HR and payroll tools also paves the way for a more in-depth payroll analysis. It identifies discrepancies in your existing payroll process and enables you to pinpoint solutions to address these errors.

For instance, let’s say you recently observed a sudden spike in your turnover rates. At the same time, you found out through a satisfaction survey that a significant number of your employees feel unhappy at work.

It is possible that you might need to review and enhance your employee benefits program to consistently meet your employees’ needs and expectations. Similarly, if your HR and payroll staff’s performance may seem lacking in efficiency, then take it as a sign that they need to upskill by undergoing seminars and additional training.

#17. Secure Your Payroll Records

Securing records of your company’s finances and employees’ compensation is a simple but crucial payroll tip.

After all, most federal agencies and state government offices require employers to keep their payroll records for two to four years, depending on the document type.

Employers must store pay stubs for a minimum of one year or wait until their employees have finished filing their taxes.

You must also be mindful of the possible risks and disadvantages of storing a physical or electronic copy of your payroll documents. Paper documents must be kept in a safe and sturdy filing cabinet to protect your essential data from theft, tampering, and physical damage caused by calamities.

Meanwhile, electronic records are best secured in a cloud storage for improved accessibility and sustained confidentiality of sensitive company and employee information.

#18. Ensure Your HR & Payroll Departments Are In Sync

Your HR and payroll departments’ roles overlap all the time, since both departments primarily deal with updating employee records, enforcing company policies, and managing payroll.

As such, you must ensure there is open communication and cooperation between the two departments.

For instance, if an employee gets married, adds a dependent, or gets a salary raise, the changes in their employment and filing status must reflect on their payroll records.

At the same time, your payroll manager must consult with your HR department about whether to apply specific salary adjustments, bonuses, or deductions to employees’ earnings during the current or succeeding pay period.

#19. Hire Tax and Payroll Professionals

Employing tax and payroll professionals is a payroll tip that works if you have the extra budget, as they can assist your team in fulfilling your payroll and income tax obligations.

On the other hand, depending on your needs, there are multiple payroll professionals who can aid in your business operations.

For example, a payroll systems analyst is responsible for setting up elaborate program specifications for automated payroll processes.

You can also hire a payroll consultant to provide more in-depth guidance to your HR and payroll team. The bottom line is to employ additional talent with knowledge and skills that improve your operations and benefit your company and staff in the long run.

#20. Ask Employees for Feedback

The last but not the least important payroll tip is to ask your employees for feedback. A clear-cut and well-oiled payroll process is instrumental in retaining employees.

That said, it is just right to request honest reviews from your employees because they have first-hand experience of your existing payroll policies' effectiveness or lack thereof.

Encourage them to specify common errors they encounter in their paychecks and employment records. Ask them whether they have experienced delays in receiving their salaries, and if so, whether the issue was addressed and resolved in the fastest possible time.

More importantly, have your staff input any constructive comments or suggestions that they strongly feel will help boost your current payroll management system.

Payroll Tips FAQ

#1. How do I prepare payroll for my business?

To prepare payroll for your business, you must classify whether your employees are W-2 staff or independent contractors. You must also set up a payroll schedule, follow tax and payroll regulations, and calculate, withhold, and disburse salaries, taxes, and deductions on time.

#2. How do you ensure payroll accuracy?

Conducting regular audits helps ensure payroll accuracy. By reviewing your records quarterly or annually, you can effectively determine whether all employee salaries, benefits, and taxes were accounted for correctly.

You can also pinpoint any repetitive errors in your payroll process and figure out how to improve and minimize these mistakes moving forward.

#3. Is preparing payroll hard?

Yes, preparing payroll is a challenging feat. It entails knowing and understanding existing labor laws, meticulously calculating wages, and setting aside a payroll budget.

You must ensure accuracy and consistency in processing payroll at all times; otherwise, it may negatively affect your business’s finances. There’s also a chance of facing penalties and legal action if you fail to disburse the correct salary amount or miss a tax filing deadline.

#4. How to handle payroll for remote employees?

The key to handling payroll for remote employees is identifying whether they are based in a different state or country. Next, take the time to learn the specific payroll and taxation rules in their area.

Additionally, it is essential to choose a payment schedule, time-tracking system, and payment method that suit both your business and your employees’ needs.

Final Thoughts

By following the payroll tips described in this article, you create a work environment conducive to your staff's improvement and growth.

Behind every successful company is a hardworking team that ensures the business meets client expectations consistently. As such, it is not enough to recognize your employees’ efforts and call it a day.

Your role as their employer is to implement an efficient payroll process that adheres to their needs—from providing the proper compensation to offering health and wellness benefits to motivating them through incentive programs and bonuses.