Setting up payroll and benefits for your company can be a daunting process. If you only have a few employees it’s likely that you as the founder are managing all of these tasks by yourself. This week I’ll be sharing some helpful tips for setting up payroll and benefits tips for small businesses.
Tips for setting up payroll
Be aware of federal and state laws – These include minimum wage, overtime eligibility and pay, record-keeping requirements. The Department of Labor has a page for Employers that answers common questions and is a good resource. In addition, they provide a list of State Labor Offices to direct you to specifically state that your business is located in.
Determine your payroll schedule – Will you pay your employees weekly, every other week, monthly, etc? There may be state laws that dictate payroll frequency so check with the link above to see if any of those apply to your business.
Classify your employees – Hourly? Salaried? Independent contractor? It’s important to classify your employees properly for a couple of reasons. First, an employee’s classification impacts how the amount of tax withheld from each paycheck. Second, the FLSA (Fair Labor Standards Act) classifies as employees as exempt or non-exempt which impacts eligibility for overtime.
Payroll Systems – Most small businesses use some type of payroll system to help streamline the payroll process. There are many, many systems out there and it takes some research to figure out which will be the best for you. Things to consider when researching systems are cost, support, and features this will help ensure that you end up with a system that fits your needs.
Tips for setting up benefits
I have grouped payroll and benefits together in this post because a comprehensive approach to benefits can be just as important to employees as payroll management. A company’s benefits are a major consideration when evaluating a new opportunity. There are many types of benefits – I have listed some of the most common below:
- Health insurance
- Dental and vision insurance
- Commuter benefits
- Paid time off
- Paid holidays
- 401(k) plans
In addition to the list above, I recommend having some benefits that are unique to your company and reflect its values. This could be flexible work schedules, happy hours, lunches, etc. Once you decide which benefits you will offer employees you will need to figure out how. There are many different ways to go about managing the administration of your benefits. As with a payroll system, it will take a bit of research to find the best solution. One system may be able to handle all of your payroll and benefits needs. It can be easy to get lost in acronyms and HR specific terms when researching options so I have included descriptions of the two most common options below:
An HR software or HRIS (Human Resources Information System) is a great solution for small businesses that are growing. An HR software will help organize all of your employee information while also assisting with administering benefits and payroll. The cost of HR software is around $20 per employee per month.
PEOs (Professional Employer Organizations) are external organizations that co-employ employees with your company. Since they co-employ employees from many organizations PEOs are able to secure benefits packages that would typically only be available to larger corporations. This can be a good option for small businesses that want to offer very comprehensive benefits packages. PEOs also handle payroll and compliance. However, they are are a more expensive option typically $100 per employee per month.
Finding the right systems can be complicated and time-consuming. However, getting it right will lead to higher engagement and retention. At Alpine Talent Partners we partner with small businesses to make sure they have the payroll and benefits that meet their needs. Reach out today to find out how we can help you!