There was the Great Resignation. Then there was inflation. Now everyone’s talking about the recession. Yet many corporate leaders haven’t let these challenges bring them down. In fact, a recent survey shows the majority of small businesses are planning an expansion—soon. However, as companies expand, one of the first challenges will be finding ways to simplify payroll.
Just how many smaller entities expect to expand by Q4 2023? Nearly two-thirds, according to reporting from Bank of America. And if you’re one of these intrepid entrepreneurs, you’ll want to make getting bigger as easier as possible.
Though payroll might not seem like a huge problem, it can become a major headache when you scale. Typically, scaling up involves adding more people to your roster. That’s a good thing because you can do more. But it requires that you avoid getting mired down in complications related to keeping payroll running smoothly.
Remember: People don’t appreciate it if you mess up their salary. So you’ll want to head off any concerns by putting a few pragmatic measures in place. Namely, try the following strategies to simplify your payroll. You’ll sleep better at night and your team will get paid on time, every time.
1. Partner with an EOR for internal workers’ payroll needs.
In today’s digital world, you don’t have to stick with local candidates when you want to hire talent. However, you can’t just assume that you can pay international workers the same way you pay domestic ones.
Many small business owners realize too late that onboarding professionals from other countries can get sticky. From calculating taxes and keeping up with labor laws, the little things can become gigantic stumbling blocks.
The easiest workaround for this issue is to partner with an EOR, which stands for the employer of record.
The EOR should have a legal entity in the country where you want to hire at least one employee. Though the employee will work for you in practice, the employee will be paid through the EOR and employed by the EOR on paper. As Remote explains, outsourcing global payroll responsibilities reduces the chances that you’ll run into compliance questions or other legal concerns.
2. Have a third party conduct an audit of your employee classifications.
Many businesses have gotten tripped up by misclassifying their employees. The U.S. government regularly tracks lawsuits of employees who have been misclassified.
For instance, a common error companies make is calling someone an “independent contractor” when the person is really acting as a full-fledged employee. Running afoul of correct classifications can make life miserable for you and potentially tarnish your brand reputation.
It’s worth paying an advisor to help you make sure you’ve accurately classified all your current and anticipated future workers. You may even want to check out online resources so you understand the differences between worker classifications. The more you know, the less chance you’ll stumble.
3. Move to an automated payroll system.
Are your team members still manually processing any part of your payroll? Manual movement of data can lead to unintentional human error. It also can eat up a lot of personnel time. When you expand, you’ll only increase the chance of payroll-related errors as well as create more busy work for your people.
Technology has come a long, long way. Today, there are plenty of cloud-based automated systems and solutions, including those geared toward payroll. The most valuable allow everyone to gain access to parts of the system.
For instance, your administrators may be able to see all information whereas your employees may be able to log on and view their pay information. Some automated systems have matching apps so employees can input their weekly or biweekly hours, streamlining the process even more.
4. Pay everyone (even vendors and contractors) at the same time.
Is your payroll efficiency being undermined by different payroll timeframes? Do you pay some people monthly, others biweekly, and contractors on-demand?
These staggered pay deployments may work for you right now. They won’t work forever, though. The bigger you get, the harder you’ll find it to maintain this kind of haphazard pay system.
The answer is for your company to begin to consolidate all the pay schedules.
An example would be to move everyone to the same payday, regardless of their roles. That means all the money will be coming out of your account at one time, so you’ll always know how much you need to have ready to simplify and meet payroll demands. You can even do this with your contractors. Just let them know in advance that as long as you receive their invoices by a certain date, you’ll pay them on the next payday.
Who cares what people say about supply chains and higher prices? If you feel like the timing is right for a scale-up, go for it. Just make sure that you don’t forget to take a few precautionary measures to help simplify your payroll in advance of a growth spurt.
