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Outsourcing Payroll to Meet the Needs of Your Business

Outsourcing Payroll to Meet the Needs of Your Business

Posted On: December 7, 2018

There are some functions of your business that absolutely must be done by the company internally. These are the functions that define your business, and sending them out to another company would impact your business’ ability to maintain its reputation and grow. Other functions, though, may still be vital to your company but don’t necessarily need to be handled by your employees. One of these important functions is the processing of payroll. While your company absolutely needs to make sure that this is done correctly, it might be a smarter move to have it done off-site. Fortunately, outsourcing payroll is a well-trusted and often-used type of business relationship.

Guide Sections:

What is payroll outsourcing?
Why outsource payroll?
How does outsourcing payroll work?
What are the benefits of outsourcing payroll?
How much does it cost to outsource payroll?
Payroll outsourcing tips to avoid mistakes
Making the right choice

What is payroll outsourcing?

Unlike many other business practices, outsourcing payroll is almost exactly what it sounds like. Rather than going through the payroll process in-house, a business can choose to outsource various aspects of the process to an outside company. Generally speaking, this company will do most of the heavy lifting when it comes to matters of payroll, including not only factors like processing, but also keeping track of tax matters and even dealing with industry-specific compliance issues. Companies that choose to outsource do so for a number of reasons, but it’s fairly common no matter what industry at which you choose to look.

Why outsource payroll?

There are many good reasons for outsourcing payroll. One of the most common, of course, is simply a matter of not having the expertise in-house – a payroll company already knows how to get the job done, so it’s simply more efficient to let them handle the matter. Other companies might have the expertise in-house, but they might not have the time or equipment necessary to handle their current workload. Other companies, however, might choose to outsource because doing so will allow them to spend less than it would cost to keep a full-time payroll employee on staff.

outsourcing payroll

Companies choose to outsource this kind of work because it makes sense for their business. There’s not really a right or wrong reason to make this choice. If outsourcing can free up resources or capital, it’s usually an easy decision for a company to make that choice.

How does outsourcing payroll work?

It’s always a good idea to start your exploration of a topic by determining how it works. Payroll outsourcing may be common, but relatively few people outside the business world actually understand how it works.

  1. Step 1: A contract. You’ll find the company that is the best fit for your needs and choose a program of services that meets not only your business’ needs, but also your budget.
  2. Step 2: Supplying data. You’ll typically lay out all of the information that the other company needs to know, including tax information and even the schedule on which your payroll should be run.
  3. Step 3: Communication. Once you’ve provided the payroll company with the relevant information, you’ll continue to interact with the company as you make changes to your workforce.

Most of what you’ll do, though, is simply paying invoices and breathing deep sighs of relief as you realize that you don’t actually have to handle the minutiae of payroll processing any longer. This is largely a hands-off process once your relationship is established and all of the various processes get up and running.

What payroll functions does my company still have to perform if we outsource?

Ultimately, what your company is responsible for after you enter into your outsourcing agreement really comes down to the services that you choose. Your particular situation may be more or less complex than others, so you might have many services done by the other company or only a comparatively small number of services outsourced. It’s important that you read your contract carefully and that you understand exactly what the other company can do for you.

In reality, your company still bears one hundred percent of the responsibility for compliance and tax issues even if you’re expecting the other company to take care of those duties. This means that you’ll still need to double-check to ensure that you’re having the correct amount of taxes withheld, that you’re classifying your employees and contractors correctly, and that you’re following any specific fiscal rules that govern your industry.

What are the benefits of outsourcing payroll?

If you’ve always done payroll yourself, you may wonder why outsource payroll at all? After all, doing so in-house seems like it might be a savings to some and at least you’ll have the benefit of overseeing everything that is going on. This type of small business outsourcing is very popular for a reason, though, and there are actually a number of benefits of payroll outsourcing. Below are only a few of them that have many businesses choosing to have another company take over the responsibility for their payroll duties.

Headcount Benefits

Processing payroll means having the available employees to do the processing work. If you’ve got a very small business, that generally means doing that work on your own. As you grow, that may mean bringing in an outside party to do the payroll work. Over time, you’ll have to accrue enough people to not only effectively process payroll, but to make sure that the process is secure and done correctly. This can be quite an expense as well as a fairly ineffective use of your workforce.

outsourcing payroll

If you choose to outsource, you’ll be able to eliminate the need for a large payroll department. You may still choose to have someone oversee issues of compliance and work as a liaison with your payroll processor, but you won’t need an entire department. This will allow you to better allocate your personnel to those areas that can actually help your business grow.

Better Security

Payroll security is a serious matter. Unfortunately, a surprisingly large number of the security issues that crop up with payroll are internal, both due to the actions of employees and the security failures of the companies themselves. This is not, however, generally something that you’ll have to worry about if your work with an outside company. These companies are in the business of processing payroll for others so they’ve already made sure to have the right security measures in place. If you want to rest easily with the knowledge that your data is safe, outsourcing may be the right choice for you.

–Payroll fraud occurs nearly twice as often (14.2 percent) in small organizations with less than 100 employees than in large ones (7.6 percent)

(Source: Forbes.com)

Avoiding Startup Costs

There are some fairly high costs that can be associated with processing your own payroll. Investing in the right software and the properly skilled personnel will require an allocation of funds that just might not be reasonable for a new business. This can be especially problematic when you look at the amount of actual work that will need to be done at first, as most software tends to be scaled for larger businesses and most payroll employees won’t necessarily have enough work to justify their salaries if you only have a few employees.

Working with another company, on the other hand, allows you to avoid these costs entirely. These companies already have the software they need and can offer a price based on your business’ actual needs. If you want to avoid paying for things you don’t need, you need to consider outsourcing payroll.

Compliance Convenience

It’s always important to make sure that you stay compliant with any state or federal regulations that concern the fiscal activities of your business. Whether this means special types of record-keeping or just paying your taxes correctly, a good payroll processing partner can help you. Your business will certainly always be responsible for keeping up with its compliance obligations, but choosing to work with a partner will help you to ensure that you don’t overlook any of the rules that can end up costing your company dearly.

Expert Help

Working with a payroll processor also gives you the benefit of that company’s expertise. You don’t have to try to hire away a payroll expert for your new company, nor will you have to train someone new every time there is a turnover in your payroll department. You will instead get access to people who know what they are doing and how to handle your accounts, with the benefit of knowing that this company will do its best to keep your business by dealing with all of your payroll matters with the utmost care. As long as you ask the right questions of the payroll company you are looking to outsource to, you should be able to reap the many benefits of payroll outsourcing.

Not sure about outsourcing your payroll? Click here to read about the benefits of managing your payroll online.

How much does it cost to outsource payroll?

Cost is always an issue with payroll. While there is no standard price for payroll outsourcing, there are certainly factors that will influence what you pay. Typically speaking, you’ll be looking at a fee of between twenty-five and two-hundred dollars per month just for basic payroll services, depending on the size of your company, your industry, and many other factors. Beyond that, you’ll also pay fees for tax assistance, paycheck issuing, and any other costs that are not part of your basic package.

Every payroll company has its own schedule of fees, so it’s important that you look at what’s included before you sign a contract.

Payroll outsourcing mistakes and tips to avoid them

As you might imagine, it’s possible to make some significant mistakes when you’re dealing with outsourcing payroll. This is a common problem when you outsource any kind of function, so learning how to avoid these mistakes is a necessity. Your first goal should always be to identify what others have done wrong in the past, and then you should work to make sure you can take a course of action that will allow you to avoid those mistakes in the future. Below are three of the most common mistakes companies make when they choose to outsource payroll services – as well as the simple steps you can take to avoid those same mistakes.

Making Assumptions

Your relationship with your payroll company is one that’s predicated on a signed contract. Unfortunately, far too many businesses make assumptions about what their payroll company will do for them, leaving them to scramble to figure out what needs to be done when they realize that the task they assumed was being done was actually not included in the paid-for service. This extra work leads to extra costs and, in many cases, a fraught working relationship between the payroll processor and the client company.

Tip: Read your contract and make sure you know what is included in your services. If you are not sure about what your payroll company does, just ask your representative. There are many benefits that come with payroll outsourcing, but you can only make use of them if you actually know what they are.

Garbage In, Garbage Out

An important term in computing is “GIGO”, or Garbage In, Garbage Out. In short, this means that any process that starts with bad data is going to produce a bad result. As your payroll processing company can only work on the data that you give them, they can only produce the results that come from that data. Many businesses blame their payroll company for problems when the actual issue is the information that has come from the originator.

Tip: Double-check the information that you give to your payroll company before you send it over. Never assume that your numbers are correct – run them a second time and make sure that there is always a second set of eyes on anything you’re sending out. If you are able to send out reliable data, you’ll end up getting reliable results in return.

Concentrating on Cost

One of the cardinal sins of business planning is only concentrating on the cost. While there is certainly something to be said for being thrift, you generally get what you pay for when you’re working with payroll outsourcing companies. Going for the bottom dollar might save you money in the short-term, but it can lead to problems in the future.

Tip: Instead of focusing on getting the absolute lowest price, try to focus on getting the best price for the services you actually need. Doing so will give you a much better chance of actually saving money over the long run and give you a good chance to avoid payroll problems in the future. Try to focus on the value of the service rather than just the price tag.

Click here to read why many companies are choosing to outsource HR.

Making the right choice

Choosing to outsource your payroll can be a highly beneficial decision for your business. While there are costs attached, they are more than outweighed by the resources that will be freed up and the level of competence exhibited by those who do the payroll work for your business. When you are ready to look at outsourcing payroll, it’s important that you start by looking at a company that you can trust. First, it's important to learn how to choose a payroll service. Then, if you’re ready to start reaping the benefits of outsourcing your payroll, make sure to visit PayTech to look at the company’s payroll outsourcing prices and packages.

Click here to read the Payroll Fraud Prevention Guide and start protecting your business.

Hire Top Talent: From Recruiting Strategies to Making an Offer

Hire Top Talent: From Recruiting Strategies to Making an Offer

Posted On: November 19, 2018

Growing companies always need new employees. If you’re looking to hire top talent, though, you’ll need to do more than placing an open ad. If you can make use of the right recruiting strategies and an excellent interview process, you’ll be able to bring in the best employees in your industry while filling all of your job vacancies quickly.

Guide Sections:

Developing your unique recruiting strategy
Creative recruiting strategies to hire top talent
Non-invasive screening techniques
Basic interview strategies

The basics of effective recruiting strategies

Effective recruiting strategies vary from industry to industry. There are, however, certain techniques that tend to work across the board. As you begin the process of finding the best recruits for your business, you’ll need to take some time to not only think about what makes a potential hire stand out for your business, but also what makes your business stand out to the perfect hires. Doing so will require a thorough understanding of how to market your business to potential candidates and how to ensure that you’re screening each application to ensure you get the employee who best fits your business.

Developing your unique recruiting strategy to hire top talent

Your business is unlike any other. As such, you’ll need to develop a unique recruiting strategy. This does not, however, mean that you’ll necessarily need to throw out everything you know about recruiting. Instead, you’ll want to take a look at how you’re working to recruit candidates now and get rid of those aspects of the process that just don’t work for you. Every recruiting strategy was developed by a company that needed that particular strategy to get great candidates – so make sure yours works just as well for your own company. Don’t feel like you have to follow a specific process just because it’s the industry standard.

human resource management best practices

What are your goals for hiring new employees?

Try to remember that you’re not just hiring what you see on a resume – you’re hiring a real person. As such, you need to think about what your goals are for that person and for your business. You’ll want to put some thought into not only what you’re getting out of your hire, but also what your hire is going to get out of your company. Doing so will not only help you find a person who’s a better fit for your company, but it will help you to ensure that the person you hire is willing to stick around.

Identify the persona of who you want to hire

A candidate persona can be thought of as your marketing profile for a potential hire. It’s the conglomeration of information including current employee profiles, hiring needs, and background data among other data points. You’re creating a profile for an ideal employee, one that will attract that person to your business. Once you have the persona identified, you’ll be able to start attracting the best potential hires. It may take you some time to create the ideal persona for your candidates, but the work you put in now will help you to better target the people you need.

Find out what they might be looking for in a company

It’s just as important to figure out what your potential employees are looking for in a company. Many companies make the mistake by having the mindset that it’s only the employee needs to put his or her best foot forward when in the midst of the employment process. Do research to find out what attracts employees to businesses in your field, as well as what other companies do to retain their best workers. Your goal should be to attract the best talent so that they’ll feel the need to impress you.

– The 5 things job seekers take into account before accepting a job offer

From most to least important:

  • Salary and compensation
  • Career growth opportunities
  • Work-life balance
  • Location/commute
  • Company culture and values.

(Source: inc.com)

How will you attract applicants to apply or interview with your company?

It’s rare that a field will have such a limited number of opportunities that top candidates have no choice but to apply to a single company. Unless your business has an absolute monopoly in your industry, you’ll have to figure out a way to get the best and brightest to apply to your job postings instead of those of your competitors. Significant thought needs to be put into this factor, as even those who create fantastic job opportunities will lose out on top-tier talent if they are unable to catch their attention in the first place.

Use creative recruiting strategies to hire top talent

Recruitment is as much a game of marketing as it is one of filling open positions. You are looking to market your business as the best place to work for potential employees, even if you can’t offer the same perks or salary as your competitors. As such, you’ll need to get creative with your attempts to recruit. Your job is to go above and beyond the mundane, adding new methods of attracting employees to the tried and true methods of just posting on job boards or visiting college recruitment fairs.

hire top talent

If you want employees who are more than average, you’ll have to go beyond the average to bring them in.

Go beyond posting open positions on job sites

If you want to hire top talent, you’re going to have to go beyond posting open positions on your local job boards. This is not, however, to say that you can avoid job boards altogether. If you can use job boards in the correct manner, you will certainly attract top talent. You will need to do more than just passively wait for applicants, though. Want to hire the best? You’ll need to aggressively pursue them before someone else convinces them to take a different job.

– Where do job seekers go to look for jobs?

  • Company Websites – 77%
  • Referrals – 71%
  • Suggestions from Friends or Family – 68%
  • Online Job Sites (Monster, Careerbuilder) – 58%
  • Publications or Online Sources in a Field – 57%
  • General Web Search (Google, Bing, Yahoo) – 55%
  • Professional Network Site (LinkedIn) – 47%
  • Professional or Alumni Organization –  41%
  • News Media – 39%

   (Source: Gallup State of the American Workplace Report 2017)

Use social media to interact with people you want to hire well before you hire them

Social media is a fantastic way to get in touch with new people. If you’re looking to hire top talent, you’ll want to do a bit of research on the who’s who in your field. Once you know the potential hires, reaching out to them on social media is the logical next step. You can have a conversation with these individuals in a low-stress setting, allowing you to make the pitch for your business before you start the formal recruiting process. Not only will reaching out through social media help you to make a connection, but it will also allow you to gauge the personality of the individuals to whom you reach out.

– 79% of job seekers use social media in their job search

This figure increases to 86% of younger job seekers who are in the first 10 years of their careers.

(Source: inc.com)

Host open house events or workshops at your offices

Your end goal when recruiting is to bring a new employee into the office and integrate them into your business’ culture. One of the better creative recruiting strategies, then, is to jump ahead and give your potential employees a look at how your business runs by holding open houses and workshops at your office. Doing this will allow you to bring potential employees in your office and give them an idea of space in which they might work. If you hold a workshop in your office, it might also give the potential employee an idea of the type of mentorship they can expect to receive while furthering their own careers.

recruiting strategies

Build a company newsletter highlighting your office culture, accomplishments, and employees (including leadership)

If you can’t bring your potential employees to see your company’s culture, make sure that you have a way to send it out to them. A good newsletter that’s available to employees and the public alike can be a great way to advertise exactly what makes your company so unique. Your newsletter doesn’t need to be an advertisement, but it needs to be something that will interest people outside of your office. Fill it with the details of things that make your office standout, including the choices made by the leadership. Doing so will help to attract the talent that’s looking for a special place at which to work.

Use non-invasive screening techniques

It should be a given that you’re going to screen your potential employees. After all, you don’t want to waste anyone’s time and you certainly don’t want to bring in an employee who is going to be a liability to your business. Despite the fact that you need to screen employees, though, you’ll want to figure out a screening method that won’t insult your potential employees. You’ll need to find a way to look at relevant information but in a non-invasive manner.

Browse their online presence

One useful way to screen employees is to look at the data that they put out in the public eye. This is actually a fantastic way to not only see how the employee looks at the rest of the world, but at how the rest of the world will see your employee once he or she represents you. Look for problematic statements and behaviors ahead of time, checking them against the statements he or she has given you. Doing so will help you to remove extreme cases from your hiring list quickly.

Talk with their references

Your potential employee gave you a list of references upon your request. He or she certainly expects you to contact these people because they are likely to have something positive to say about him or her. Because the contact is expected, contacting references is a very non-invasive way to screen employees. Double-check to ensure that the references given actually have a relationship with the potential employee and that they can corroborate any information that he or she has given to you. Speaking to references is an excellent way to get a non-invasive insight into the personality of your potential employee.

About screening for marijuana

Marijuana screening is still common, even in those states in which the possession of marijuana has been legalized. Whether or not your business screens for marijuana is a choice that your business will have to make. If your business’ reputation can be hurt by an employee who uses recreational or medical marijuana, you may still want to screen. Likewise, any business that works with the federal government or in a federally-regulated business must continue to screen. If your business doesn’t have those worries, you may not need to worry about disqualifying a promising candidate because of marijuana usage which may be a necessary medical treatment

– There are roughly 162,528 medical marijuana patients in the state of Arizona.

(Source: azdhs.com)

Use these basic interview strategies

Once you’ve made it through the basic screening techniques, it will be time to interview. Don’t try to be too elaborate with this process. Instead, attempt to keep things as simple as possible. The three strategies below you will help you to make your search much more efficient and help you to gain the respect of your interview candidates.

Related: The 10 Best Interview Questions for Managers

Avoid multiple interviews with the same candidate unless it’s on the same day

Don’t waste the time of your potential employee. If you bring him or her into an interview, you should get all the information you need in one sitting. For positions that require input from multiple interviewers, you should schedule those interviews for the same day. Bringing in a potential employee for multiple days of meetings means that you aren’t interviewing efficiently and that you certainly aren’t utilizing your information correctly to make a choice. Show your candidates the respect they deserve by avoiding multiple rounds of interviews.

– The average length of an interview process in the US was 22.9 days in 2014.

(Source: Glassdoor 2015)

Have interviews with different candidates on the same day

You should, however, have multiple candidates interview on the same day. While you might feel like you’re helping employees by giving them their own days on which to interview, what you’re really doing is dragging out the hiring process. Conduct your interviews on the same day so that your company can fill its vacancies efficiently and so that you can let your candidates know your decision in a reasonable amount of time.

effective recruiting strategies

Make a solid offer that is beneficial to both your company and the candidate

Never try to lowball a good candidate. While there might be a number of very good reasons to watch the bottom line, you should always make a solid offer that is just as beneficial for your candidate as it is your business. High-tier candidates know exactly how much they worth and they know when a company is attempting to squeeze them for a lesser deal. If you don’t make a realistic offer, you’ll be stuck with an employee who doesn’t know his or her own worth.

Related: Hire and Retain the Best Employees with These Employee Benefit Trends

Make your company a place where people love to work

Finally, ensure that your business is a place where people love to work. Your job is to make sure that new employees become long-time employees, never moving on simply because of your company’s culture. Treat employees with respect from the moment they interview through the day they retire, and make sure they love your company as much as you. Take a look at these company culture examples for ideas on how to enhance your company’s culture to attract talented people.

Also, taking steps to learn how to inspire your team can go a long way towards boosting your employees’ excitement to come to work day in and day out. If you can make a company that people love, the right candidates will find you, because your employees will be spreading the word to everyone in your industry they network with.

When you have the right recruiting strategies in play, you’ll be able to find a higher class of candidate. While the effort you need to put in might be significant, the rewards will be even greater. If you’re ready to bring new employees in, make sure to visit PayTech and download the new employee welcome packet.

Restaurant Payroll Guide

Restaurant Payroll Guide

Posted On: September 10, 2018

Running a restaurant means becoming a master of many disparate skills. One of the skills with which most new owners aren’t equipped is the ability to deal with restaurant payroll. Restaurant payroll is a beast unlike any other, something that’s far different than the payroll of the average business. If you are involved in this world, you’ll need to learn how to deal with the unique issues related to payrolls, tipped employees, and the financial situations that tend to be so common in the food service industry. Fortunately, a basic guide can help you to get started on the right path.

Guide Sections:

About paying tipped employees
FICA tip credit
Restaurant employee meal policies
Overtime policies for restaurant workers
Benefits and deductions
Common errors in paying tipped employees

Basic restaurant payroll issues

Unlike many other business practices, outsourcing payroll is almost exactly what it sounds like. Rather than going through the payroll process in-house, a business can choose to outsource various aspects of the process to an outside company. Generally speaking, this company will do most of the heavy lifting when it comes to matters of payroll, including not only factors like processing, but also keeping track of tax matters and even dealing with industry-specific compliance issues. Companies that choose to outsource do so for a number of reasons, but it’s fairly common no matter what industry at which you choose to look.

Things to know about paying tipped employees

One of your primary financial issues during restaurant payroll will be figuring out how to pay tipped employees correctly. What is a tipped employee? According to federal guidelines, it’s any employee that routinely makes at least thirty dollars a month in tips. As you might imagine, it’s quite common for restaurant workers to fall into this category and thus you’ll have to know how to deal with them.

 

restaurant payroll

 

One of the major issues with restaurant payroll in dealing with tipped employees is learning exactly how they should be paid. According to federal law, tipped employees only have to be paid around 2.13 an hour if that wage plus their regular tips equals the federal minimum wage. At least, that holds true in most states – according to some state laws, even your tipped employees must be paid the state minimum wage even before tips are added.

If your employees aren’t making the minimum wage after tips, it’s up to you as an employer to make up the difference. This means that if an employee is making less in tips than he or she would need to meet the minimum wage, you will have to pay the difference. Given that tips typically make up more than half of a restaurant server or bartender’s wage, failure to meet that mark can be tougher on the server than on the business owner. It is, though, important that you remember your responsibility to make sure that your employees are bringing in at least the state-mandated minimum wage so that you are able to stay on the right side of your state’s labor laws.

 

FICA tip credit

As an employer, you have a duty to pay taxes on the earnings of your employees. For most business owners, this is simple. When you’re dealing with a restaurant, though, things can get a little more complex. Because tips are calculated as part of an employee’s wages, it’s still the job of the business owner to pay taxes on those earnings. To ensure that business owners are keeping up with their restaurant payroll and the tips of their employees, and that employees are properly reporting their earnings, the federal government has created a program that is commonly known as the FICA Tip Credit.

 

restaurant payroll

 

This tax credit is filed when the business files its taxes and can save a business quite a bit of money over the course of a year, especially if it has multiple tipped employees. Any tips that help to put an employee over federal minimum wage can count towards this credit, which in turn helps to reduce the tax burden of the employer. As such, it helps to ensure that employee tips are encouraged and that employers work to make sure that their employees make more than the federal minimum wage. It’s a system that truly helps everyone.

 

Unfortunately, qualifying for this tax credit does require a fair bit of paperwork. On one hand, the business needs to keep very precise records of how much each employee makes on his or her tips. On the other hand, it also puts the business in the position of having to rely upon its servers to be honest about the tips they bring in. This means that the cash tips an employee makes absolutely cannot be considered “under the table” and that employers have to make reporting tips into part of the business’ culture. It takes a bit of effort to make this work, but it improves the system for everyone.

 

Restaurant employee meal policies

It’s not uncommon for restaurant employees to receive some type of meal-related perk while they’re on (or even off) the clock. When one is surrounded by food all day and likely doesn’t have much time to stop and eat, it only makes sense to give workers a chance to grab something nearby. As an employer, figuring out what your employee meal policy should be is actually a vital part of your book-keeping and restaurant payroll process. You have to figure out if providing a free meal is actually something that can work for your restaurant.

 

restaurant payroll

 

On one hand, free meals are actually a tax deduction for your business. If you offer employees free meals – even if they’re offered at a specific time or place – they count as a free employee meal and can be written off on your taxes. If you choose this route, you’ll have to deal with the loss of profits that come from providing free meals and set up a system to ensure that all of your employee meals are properly logged. Record keeping can be important here, so make sure that you’re willing to do the paperwork.

 

There are many good reasons to avoid free meals, of course. The biggest one is always cost – free meals do cost your company money and they certainly slow down the turnaround time on the meals cooked for your customers. Figuring out if you can afford to offer free meals is more than just a matter of math, though. If you see that offering free meals will help the morale of your employees and help to reduce your turnover, you might want to take the financial loss in this arena in order to keep your costs down in others.

 

 

Overtime policies for restaurant workers

Overtime is one of the bigger problems in the restaurant industry. After all, margins are typically fairly slim in most restaurants and labor costs account for a huge part of the business’ overhead. Even with this in mind, though, it’s still important to remember that the typical overtime rules still apply to your employees. If an employee works more than forty hours per week, he or she is entitled to time and a half. This means paying significantly more even if your labor costs are already sky-high. As you might imagine, avoiding overtime costs is a huge part of keeping a good restaurant afloat.

One of the best ways to deal with overtime costs is to pay attention to who is working and when. This doesn’t just mean making sure not to schedule your employees for more than forty hours. It also means that you’ll need to ensure that you aren’t asking employees to stay after their shifts during a rush and that you’re giving those who are coming close to the cap a chance to leave early when and if necessary. You’ll also have to keep an eye on shift-switching and covering, as any of these moves can put an employee over that threshold.

 

restaurant payroll

 

Despite the monetary issues that overtime might bring your business, it’s vital that you follow the rules. Not only is a failure to pay overtime a great way to lose a valued employee, but you can also receive enormous fines if and when you are reported to your state’s labor board. As such, make sure that you pay attention to your restaurant payroll and any potential overtime work in your business and make sure that even those who are working just forty-one hours a week are given the correct payment for that single overtime hour. Doing so will help you to avoid falling afoul of strongly-enforced regulations.

Benefits and deductions

Benefits are a highly sought-after part of the overall employee compensation package. After all, employees don’t just want a paycheck – they want the security that comes with knowing that they’ll be cared for if they get sick or need time off. In fact, a lack of benefits is something that routinely comes up in exit interviews. Unfortunately, many restaurants operate on such a tight budget that offering benefits can be financially painful. Figuring out how to offer benefits and keep your doors open at the same time is one of the puzzles that you will have to solve as a restaurant owner.

 

If you have a small restaurant, the good news is that you technically aren’t required to offer any kind of health insurance benefits. Only business with at least fifty full-time employees have to offer health care benefits, so the average restaurant won’t qualify. It is, however, something you may still want to offer. Since benefits are so rare in the restaurant industry, you’ll stand a better chance of attracting top talent and keeping your best employees. Even other benefits like cash bonuses or paid time off might be enough to attract the best workers in your region.

 

restaurant payroll

 

One of the easier ways to offset benefits is by taking the right tax deductions. Fortunately, there are a host of great deductions that can be taken by virtually any restaurant. Food costs, overhead costs, and even the cost of advertising can all be deducted on your tax forms. You’ll likely need the help of a professional to maximize all of your deductions, but doing so will help you to greatly reduce your tax burden each year. Once you’ve got your deductions squared away properly, you’ll find that you’ve got more money available and more of a chance to provide the kind of incentives that will keep your best employees working for you.

 

Common errors in paying tipped employees

Given the difficulties in paying tipped workers, you should be able to imagine that there are quite a few mistakes that get made in restaurant payroll by even seasoned owners. These errors range from the minor to the truly major and they can hurt both your business’ bottom line and the morale of your employees. Avoiding some of the biggest mistakes means paying closer attention to how your employees are paid and how your employees are tipped. Fortunately, doing so can become second nature once you get into the habit.

 

Many businesses have issues making sure that their employees are paid the correct amount of money. Remember, you have to make the difference between an employee’s tips and the minimum wage. That means keeping track of what every employee is tipped during the pay period and making sure that your employees are receiving at least the state’s minimum wage on their paycheck. If you can’t manage to do the math on this one, you’ll either have to switch over to a more typical wage scale or you’ll find yourself continually under-paying or over-paying all of your employees. It’s not a situation in which you want to put yourself, so consider working with technology that can augment your own mathematical abilities.

 

 

restaurant payroll

 

It’s also very common to run into problems concerning overtime. As discussed before, every minute working over the forty hour mark does require you to pay the employee one and a half times his or her normal wage. Unfortunately, the number of hours for which an employee is scheduled and the number of hours he or she works don’t always line up in the restaurant world. As such, you’ll want to keep a very close eye on the time that your employees actually work and make sure that the amount you pay them actually lines up with the amount that they should be owed.

 

The nature of working with tipped employees makes it more difficult to deal with the restaurant payroll than in many others. Whether you are a seasoned professional or a new restaurant owner, you may need a bit of help to make sure that you are doing everything correctly. If you’re ready to start bringing in new tipped employees and you want to make sure that everything is done correctly, make sure to contact PayTech about the New Employee Welcome Packet to help your employee onboarding process run quickly and efficiently.