Card Processing & Fees Clearly Explained
Payroll management is a critical part of any business — small, mid-sized, or large. Your team relies on their pay, and they deserve accurate, clear, and timely payment. Plus, when payroll is done right, it’s a morale booster.
To help you be sure your Payroll process is set up to best serve your needs, keep the following ideas in mind.
There are few questions more important to your team members than “When do we get paid?” As important as it is for them to know when they can expect a check, it’s equally important to your cash flow to set up a smart pay period frequency.
When deciding your pay frequency, remember that processing a payroll takes time. Build in an allowance for that (even if you use an outside Payroll Service like Simpay). If you’re running payroll on a weekly basis, you’re using a lot of time every month on this single operational element. You may want to consider paying bi-weekly or semi-monthly (twice a month).
At first glance, you may think there’s not much difference between the two choices. If you pay bi-weekly, there are 26 pay periods in the year. If you pay semi-monthly, there are 24.
Two fewer pay periods may save you time, but it also means that the day your team works on payroll changes frequently. Bi-weekly is generally preferred by employees, and allows your payroll team to dedicate the same days of the week to handle payroll.
However, a bi-weekly frequency means that twice a year you have to run an extra payroll in a given month. That can be a real hassle in terms of setting aside money for that month to handle taxes, social security payments, and 401K contributions. With a twice-a-month approach, that goes away.
You may find that combining these cadences works well for you if you have a combination of hourly and salaried employees. You might consider semi-monthly for salaried employees who rarely have changes to their pay, but bi-weekly for hourly employees whose pay can be more involved to compute.
There was a time in the not too distant past when this wasn’t a question – everyone who worked for you received a paper check.
But payroll options have advanced significantly since those days. To save on the time it takes to physically write and process checks for employees, many employers encourage their team members to take advantage of direct deposit, with 82 percent of U.S. workers having their pay put directly into their bank accounts, according to a 2015 research study..
It’s not a requirement to have a bank account to get a paycheck, however, so employers must offer alternatives to direct deposit. A recent offering that some employers are taking advantage of is the payroll card. A payroll card acts like a prepaid debit card and can be used for purchases or to even pull cash out of an ATM. For employees without a bank account, these cards can be an easy and convenient way to quickly access their pay.
However, with the pros of payroll cards come a number of cons. Many payroll cards come with a variety of fees for the user, including check balance fees, ATM fees, and POS fees. Because of this, employers using payroll cards must also offer alternatives to this method, like paper checks.
Payroll takes time. Even if your team is primarily made up of salaried employees, you’ll need to manage vacation and sick pay, benefits payments and other deductions, and check them each pay period to ensure everything is correct. Still, payroll for salaried employees is the less complicated scenario.
If, on the other hand, you have primarily hourly employees, or a mix of hourly and salaried, payroll management becomes more complex. Hourly employees need to have time cards reviewed and verified, and hours computed during each pay period. Deductions fluctuate based on the number of hours an employee works, and all numbers need to be audited for accuracy.
Unless you’re an accountant, you didn’t start a business so that you could spend your days learning tax codes and payroll lingo. So, you may be wondering if it makes sense to hire an internal resource to manage payroll, or if you should spend your own time computing and issuing pay. You may also consider outsourcing your payroll. Even when it seems easy to run yourself, there are intricacies involved with managing payroll that may be better left to an expert to do.
If you’re considering the value of outsourcing your payroll, start by considering how the majority of your team is compensated. If, for instance, most of your employees are salaried, it isn’t a significant amount of operational overhead for you or another internal resource to manage payroll.
If, on the other hand, you have a lot of hourly employees, running payroll can be time consuming. This is especially true if your team’s hours fluctuate from week to week. Outsourcing in this case frees you up to concentrate on your business instead of spending hours processing payroll.
Another reason to consider outsourcing your payroll is that a professional will understand all of the various legal requirements, tax codes, 401K provisions, etc that need to be followed to keep you in compliance and ensure your employees are paid appropriately.
As you grow, it is likely that your payroll processing will become more complicated. Keeping on top of tax regulations, both local and federal, managing withholding changes, and handling the ins and outs of benefits like 401K contributions, can take significant amounts of time as your business adds more employees.
Payroll is a critical piece of your business, no matter what your business does. It can be time-consuming and confusing, but it doesn’t have to be. Making smart decisions on how to set up your payroll, and making changes to adapt to your organization’s situation, will set you on the right path to consistent and accurate payroll management.
Wondering if outsourced payroll is worth it for you? Contact Simpay for a conversation.
We’ll walk you through the main considerations and help you decide what makes best sense for you.
Call 866-253-2227 or email firstname.lastname@example.org.
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