The reason why an entrepreneur needs to have a great payroll process in place, because the average millennial that is entering the workplace is only staying with their employers for two point three years says Edmonton bookkeeping. This is half as long as what the average employee is currently staying with their employer. Because of this, businesses should get prepared to have more hiring, and systems in place for when their staff leave, Since statistics show that there is going to be a lot more of that activity in the future.
Best practices for entrepreneurs to create templates and forms in their system that can help simplify and automate their payroll processes including hiring, and termination. For example, when an employee is hired, an entrepreneur needs to ensure that they have their social insurance number, their date of birth and their address among other important information. If they have a form that they can simply send each new hire, an entrepreneur does not have to remember what information is needed, and then it does not matter who enters that staff member into the accounting software whether it is the business owner or their Edmonton bookkeeping company, the information has been provided.
What having templates and forms can also do, in addition to simplifying the process is that it can ensure that an entrepreneur is abiding by the labour standards, and that the employee is getting what they are entitled to. This can help with hiring, termination, record of employment and other payroll filings that must be done with service Canada. Having a system in place can allow an entrepreneur to have their Edmonton bookkeeping company to assist with this, especially since most bookkeepers already have an identification number with service Canada and are already knowledgeable about labour standards.
When business owners are growing, and they are not sure when the right time to hire an employee is, a good rule of thumb for entrepreneurs to ensure they have saved up in the bank is three pay periods. This can help an entrepreneur ensure that they have enough cash flow in their business, but also that they have enough of the cushions saved up in case something happens. This question means that if the business suddenly stops growing, or if an entrepreneur is having a hard time collecting money, it is going to ensure an entrepreneur has the money to pay their staff, without having to put their personal money into the business. Regardless of when an entrepreneur decides to hire their first staff, they should ensure that they have a well-defined payroll system in place ready for when that happens.
By ensuring that entrepreneurs have templates and forms ready for when they need to hire staff, can help them seamlessly hire staff as soon a business owner decides that it is the right time. These processes are going to make it easy for entrepreneurs to hire staff, and manage their payroll correctly, so that a business owner can concentrate on growing their business.
Edmonton Bookkeeping | What Information Is Needed To Implement Payroll
Not only do entrepreneurs need to have system is in place for how to hire on new staff when they are ready, but their Edmonton bookkeeping company also advises entrepreneurs to have decided ahead of time the frequency of their pay dates, as well as choosing their cut off times and pay dates in advance. These are important decisions, and a business owner should have thought out before they hire any employees, so that they can ensure a smooth rollout of their first payroll when the time is right.
The first thing that entrepreneurs need to decide is what is the correct payroll frequency for their business. This typically depends on the industry that the business is in, as well as the cash flow situation. If an entrepreneur is only billing their clients once a month, they may only be able to pay their staff monthly. While the recommendation for entrepreneurs is to build their clients as often as they can get away with, and also will depend on what their cash flow situation is in their business. If they typically only get paid at the end of the month, that might dictate payroll frequency. Whether it is monthly, biweekly or weekly, a business owner needs to look at their cash flow in order to answer this question.
The next question entrepreneurs often have is how should they choose their cutoff and pay dates. Edmonton bookkeeping recommends that an entrepreneur ensures that they have a minimum of one week in between cut off and payday, although the more time that they can have the better. Not only is this going to give the employer or the Edmonton bookkeeping company time to enter the payroll information in properly, but also double check payroll for accuracy. This double check is important, and the shorter the cut off time is, the higher chance of errors. Also, the other reason why it is important for business owners to have as long a time between cut off and payday, is to allow the entrepreneur time to ensure they have money in their business to cover the payroll. Whether they have to engage in collection calls, or revenue-generating activities, a longer cutoff time means that an entrepreneur has more time to bring that money into their business.
It is also important for entrepreneurs to think of if they are going to hire staff on an hourly basis or salary basis. Edmonton bookkeeping says that typically management are the only ones that get paid salary, and all other staff get paid hourly. Things to think about include a salaried employee is going to get paid the same every single pay, without changing that. That may be difficult to commit to as an entrepreneur is new. Hourly on the other hand an entrepreneur only pays for the time that they work, however if a staff member has to work longer to get the work done, that may trigger overtime hours at a higher hourly rate.
Understanding what they need to take into consideration for their payroll is important for entrepreneurs to think about before they have the need to hire employees. By thinking about payroll and creating checklists and templates can help an entrepreneur ensure a smooth application of their payroll when the timing is right. Having these systems in place ahead of time can ensure that a business owner can hire staff as soon as the need presents itself.