Although many entrepreneurs understand how important it is to ensure that they have systems set up for their employees, Edmonton bookkeeping says that entrepreneurs rarely do this before they hire their first few employees in their business. However, entrepreneurs should reconsider when it is that they are setting up their payroll systems. the reason why is because it becomes much easier for an entrepreneur to scale up their business if they have payroll processes already in place. Instead of being reactive, entrepreneurs can create systems in place, and then their business towards reaching that goal.
One of the first things that they should ensure they have in place prior to hiring any employees, is creating their payroll schedule and setting their payroll frequency. This might seem unimportant to many people, but this can actually be very important, and because an entrepreneur to change their billing cycle in order to improve their cash flow. The reason why is because if an entrepreneur makes the decision to pay their staff on a biweekly basis, they need to ensure that they are setting up their cash flow to handle that. Instead of building their clients at the end of the month, entrepreneurs may decide to bill every other week, or even weekly to help encourage the cash flow throughout the entire month. This will make it far easier to pay their employees biweekly when that employee is hired.
The next thing that an entrepreneur should consider is creating cut off and paydays, or at least knowing how much time they are going to have between their cutoff date and the date their employees are going to get paid. Edmonton bookkeeping says this is important, is so that when entrepreneurs are paying their staff, they can not only ensure the accuracy of the payroll but ensure that if for some reason they do not have enough money to cover payroll, a one week cut off. This means that they can either engage in collection calls or generating new revenue to bring that money in. Shorter the cut off time, the less likely they are going to be able to generate that revenue.
Once they have their payroll frequency and cutoff dates set up, an entrepreneur often want to know how they can tell if they have enough business to be able to afford to hire an employee. Edmonton bookkeeping says that a good rule of thumb is to ensure that they have three pay periods saved up in their bank account to ensure there is a high enough cash flow to afford to hire an employee. That way, if an employeeís business slows down for a period, they do not have to dip into their personal savings to meet payroll.
By setting up their payroll system ahead of time, entrepreneurs can ensure that their growing their business in a way to support that payroll system, so that it can be much easier to ensure a seamless transition from being a solopreneur to managing employees. Being proactive can ensure a great transition.
Edmonton Bookkeeping | Setting Up Payroll Systems
Business owners should be proactive in ensuring they have an approval system ready to go for whenever they need to hire an employee says Edmonton bookkeeping. The reason why, is the more prepared a business owner is, the sooner the going to be able to hire someone in their business. If they do not think about it until they need to hire someone, they may hold off on hiring an employee until they created the system, and by then they are understaffed. By thinking about it proactively, an entrepreneur can ensure that they are ready to hire any time that happens. This will allow an entrepreneur to grow their business quickly, without running into snags along the way.
One of the first things that an entrepreneur should decide when creating a payroll system, is if they are going to be managing the payroll themselves, or if they are going to get their Edmonton bookkeeping company to handle it for them. While most entrepreneurs try to save money in the beginning, there are certain things that they should take into consideration if they are going to managing the payroll themselves.
The first thing is they need to ensure that they have a software program that is going to allow them to take care of payroll. If they are using and accounting software already such as zero, Sage, QuickBooks or QuickBooks online, an entrepreneur should know that the software has a built-in capability to handle payroll. If they do not have accounting software, they should not need to buy one in order to handle payroll, because there are specific programs they can get that are designed to handle payrolls like ADP, he sheets and clock shark. They should check with their Edmonton bookkeeping company to verify that these can integrate well with the accounting software that they use, so that when an entrepreneur is ready to hand the payroll duties off, they can seamlessly do so.
An important aspect of managing payroll, is ensuring that the time that they are paying employees is tracked properly. Therefore, even before an entrepreneur hires someone they should be considering what time tracking software they should use. Edmonton bookkeeping recommends entrepreneurs avoid the handwritten timesheets because they are very easy to fill them in correctly. This is especially important if the employees are going to be working off-site. Different software have different capabilities such as utilizing GPS to ensure that employee is on-site before they can clock in, or taking photos of the boys to ensure they are at work. Verifying the accuracy of their time not only guards against time stealing, but it also protects employees to ensure they are getting paid accurately for all of the time they worked.
Business owners can ensure they have systems set up ahead of time, so that when they need to hire staff, they do not have to do additional work to ensure they can hire them. This will allow seamless growth of the business, that will not style out in order to have an entrepreneur set the systems up to bring new people on board.