Operating a business is generally an enjoyable, albeit stressful, undertaking for the people who start it. They typically have an easy time with setting up most parts of the operation, but there seems to be a frequent disruption when they start needing to deal with payroll.
When a business begins to take off and reaches a size that requires employees beyond just the entrepreneurs themselves, there can be a real hiccup in growth. The need to log hours correctly, calculate withholdings accurately, and get payments made on time creates a new stress on the managers, and it can leave them struggling to navigate through the process.
It’s at this stage that many entrepreneurs realize that it’s time to get expert help. And because most firms of this size aren’t able to open a full accounting department, many are taking on MasterTax tax compliance software as a tool to overcome the complexities of getting an employee’s calculations from earnings to the take-home level.
There are several reasons why an automated system like that can keep your company from sinking just as it’s beginning to swim.
Employee Retention
Nothing is quite as unpleasant for a worker as getting a surprise at tax time. When they report their exemptions to you at the onset of their employment, they are counting on you to withhold accordingly and help them meet their goals with the government. For some, they measure precisely and aim for no net cost to the IRS. Others shoot for a big refund. Whichever path they have chosen, they are expecting your company to get things right.
When you don’t, you have a serious problem. You may have people who owe large tax bills and end up being subjected to a wage garnishment. Others may feel you’ve let the government hold part of their wages, interest-free, for an entire calendar year. Either group will be very unhappy, and that’s a hard worker to hold onto.
Government Compliance
Of course, it isn’t just your workers who can run afoul of the government. You are required to make withholding payments, payroll taxes, and possibly occupational tax payments in order to keep yourself in compliance with the law.
When a company fails to meet these ever-changing obligations, the effects can be devastating. Assets can be seized, bank accounts can be frozen, and the company can start down a path that will never allow it to recover.
Using a system that correctly calculates what you need to send and where you need to send it will avoid this devastating spectrum of oversights, keeping you in operation and in the money.
Lower Overhead
These are magic words to most new businesses. As we noted earlier, it’s impossible to take on a full department of experienced payroll workers in the early days of a business, when there are only a few workers actually out there doing production.
By simply using a computerized payroll calculation system to deal with your withholdings and earnings, you are effectively getting that experienced payroll staff at a fraction of the cost. Best of all, your workers get all the benefits of that staff, and ultimately, you get to cash in on long-tenured staff who are as satisfied with their paychecks as they would be at one of your monster competitors. It’s a win-win, low-cost situation.
When all you have to do is calculate cash sales, pay the bills, and keep the profits for yourself, your payroll isn’t too tough. Once you bring other people on board, though, you have an obligation–both morally and legally–to do right by them when it comes time for them to be paid. Failing to do so can destroy your business. But it’s not necessary.
From the first day that you have an employee beyond yourself, keep current on how to withhold and pay your staff properly. It will bring dividends for as long as you operate.
Image: DepositPhotos. © masha tace