Five Payroll Pillars for New Franchise Business Owners
You’ve taken the leap into franchise ownership, with your proven business model, brand recognition, and support system behind you.
But, with great franchising comes great responsibility, especially when it comes to payroll.
Payroll powers your employees, who keep your business running smoothly. Yet, navigating payroll as a new franchise owner is daunting. In this post, we unravel the Five Payroll Pillars for new Franchise business owners. We hope to empower you to take control of your payroll, with, or without our support. We cover everything from classification basics to tax compliance, ensuring your Franchise business runs like clockwork.
Why Payroll is important
The idea behind payroll is to build a system that allows you to pay your employees. A good payroll system tracks wages, deductions, and taxes, revealing their net pay.
Here are some key terms you’ll encounter, which may feel familiar to you from previous payslips you’ve received:
Gross Pay: The total earned before deductions, such as tax, pension, etc.
Net Pay: The amount paid to an employee after withholding deductions
Deduction: The individual amounts deducted from your employee’s paycheck for things like tax, social security, Medicare, etc.
Employees with accurate paychecks that arrive on time will be easier to retain, happier, and ultimately more productive!
In addition, a smooth payroll system will save you time and headaches. This will allow you to focus on growing your franchise business.
Payroll legalities
Franchise ownership means adhering to several federal, state, and local payroll laws. These can feel like a minefield, but dictate important rules such as; minimum wage, overtime, and tax. But don’t let the legalities scare you, here’s how to stay in the know.
Stay Informed
One thing is certain, legislation changes. And as a franchise owner, it’s important to stay updated. Government websites, such as the U.S Department of Labor are fantastic resources to check for updates.
Compliance is Essential
A shortcut may be easy in the short term, but in the long run, skipping proper payroll procedures can lead to fines and legal trouble. Not to mention disgruntled employees. But, by understanding the legalities, and ensuring your payroll is legally compliant you’ll protect your business and build trust with your network.
Building Payroll Systems
At T2B Solutions we love setting up payroll systems. Here’s everything we consider when getting started with payroll.
Software
There’s a plethora of software options available for payroll, and when choosing one you must consider factors such as business size, budget, and features needed. Researching and comparing different solutions is helpful in choosing the right tool for you, and your budget. T2B Solutions offers a helpful starting point for exploring your options.
Data
With any software, you’ll need to load it with employee data. Get this data upfront, including all names, addresses, Social Security numbers, and pay rates. By having this data ready, you’ll be sure to enjoy a smooth setup process for your payroll system.
Schedule
You must offer your employees a regular and guaranteed paycheque. Ensure you determine your pay schedule. This could be weekly, bi-weekly, or monthly. Once you’ve decided, configure your payroll system.
Tax
You will need to set up your system to withhold federal, state, and local taxes with accuracy. To do this you will need to input the correct tax codes based on your employee’s location, and filing status. We recommend consulting with your accountant for support on this important step.
Integration
Consider integrating your payroll system with other business tools that you use. For example, your accounting or HR software. Having a neat software stack that works seamlessly helps to make your life easier, and minimizes the risk of errors.
The Payroll Process
Now you have your system up and running, you need to tackle the job of processing the payroll. Here are some best practices to ensure a smooth and efficient process for you and your team:
Accuracy
It’s vital that you’re accurate when processing payroll. If you’re not, you’ll make headaches for yourself, and your employees so double, and triple check everything. This includes data entry for hours worked, pay rates, and deductions.
Compensation
Many businesses have a team with a diverse pay structure, with a mix of salaried, hourly, and commission-based employees. Ensure your payroll system can handle the mix, and calculate them accurately.
Time for Tax
Taxes are a guaranteed part of running a business. But while your payroll system system should automatically handle tax withholding and deductions its always worth checking everything regularly. This will help you to catch any discrepancies and ensure your on track with your obligations.
Reporting and Recordkeeping
In addition to ensuring your employees are paid for their time and contribution, you’ll also need to generate reports for tax authorities and prepare for audits, depending on the size and location of your business. Here’s a lowdown of what you need to know to stay compliant:
Establish a reporting routine
In addition to having a schedule to process payroll, you will need a routine for generating reports. Your payroll reports should summarize:
– Wages paid
– Taxes withheld
– Deductions made
These reports are important for when you come to file your business tax return accurately and on time.
Be audit-ready
It’s always wise to be prepared for the possibility of a payroll audit. Accurate and organized records, including timesheets, pay stubs, and tax filings, will help to make the audit process stress-free. Having everything readily available demonstrates your commitment to proper payroll procedures.
Don’t Go Payroll-o Alone!
Payroll may seem daunting at first, but with the right tools and knowledge, this administrative task will become second nature. Here’s how T2B Solutions can be your partner in payroll success by offering a payroll consultation. Schedule a chat with our experts today who will be able to provide personalized guidance and answer any questions you may have on the process.
And remember, a well-oiled payroll system is an investment in both your business and employees. By following our payroll tips and guidance, and of course with our support, you can ensure your team is paid accurately and your payroll is compliant, freeing you up to focus on what matters the most – making your business dreams a reality.