Running payroll is one of the most important administrative tasks for businesses of any size. It’s also, unfortunately, one of the more tedious and expensive tasks. In fact, one in three small businesses report that they spend more than 40 hours per week running payroll. Payroll is also one of the unsung ways to retain talent; the Kronos Institute reports that 49% of employees will start a new job hunt after just two payroll errors.
Needless to say, payroll is crucial to your restaurant’s wellbeing. Here we’ll go over some payroll tips for restaurants to keep you compliant and maintain operational efficiency.
1. Keep Track of Time
The first step to maintaining payroll compliance is keeping close track of all employees’ hours. Whether this is through a physical timesheet or time-tracking software, ensuring your employees are being properly compensated for their time is crucial, particularly for hourly employees. Hourly staff are typically eligible for overtime pay; and overlooking overtime pay can put your business in legal jeopardy, making it all the more important to track hours.
For salaried employees, time tracking is less important, since they receive the same pay each month regardless of time worked, unless they are eligible for overtime.
2. Hire A Payroll Expert
Running payroll is one of the most time-consuming administrative tasks of any business; and business owners already have their hands full. Hiring a payroll expert or automated payroll software can not only free up time for managers to focus on other priorities, it minimizes the room for error. As stated above, 49% of employees will start job hunting after only two payroll errors. The costs of litigation, high employee turnover, etc. far outweigh the costs of hiring a payroll expert that can prevent such headaches from occurring in the first place.
3. Maintain Accurate Records
The cornerstone of any payroll processing is accurate recordkeeping. To simplify things, have all employees fill out the necessary paperwork upon hiring. This includes tax forms such as W2s and direct deposit forms if employees so desire.
When it comes time to run payroll, here are some crucial items for recordkeeping:
- Each employee’s hourly or salaried wage
- Overtime pay
- Vacation time
- Sick leave
- Payroll taxes (may vary by state)
- Healthcare and other benefits costs
4. Avoid Common Payroll Errors
The IRS estimates that around 33% of employers make payroll errors; and the best way to avoid them is to be aware of them. Here are some of the most common payroll errors:
- Pay Miscalculations: Whether it’s forgetting a reimbursement or bonus, improperly tracking hours or neglecting overtime wages, miscalculations in earned wages is one of the most common payroll errors. Considering it takes anywhere from two to ten days to resolve such an error, chances are employees will be disheartened or even struggle to pay their bills because of an error. This is partly why employees seek other employment after such errors and highlights why it’s of utmost importance to either automate your payroll or hire an accounting expert.
- Misclassifying employees: Before you even begin the hiring process, be sure to understand the various employee classifications so you can make informed decisions and mitigate future errors in payroll. Misclassifying an employee opens the door to over- or underpaying employees, particularly when it comes to determining whether they are eligible for overtime pay.
- Missing deadlines: When you miss the deadline on a payroll cycle, employee paychecks are ultimately delayed. This causes tension and breaks your employees’ trust. Many employees budget each month and delayed or missed payments can result in times of financial hardship for the worker. Missing deadlines for tax filings can also result in regulatory penalties and fines.
Society Insurance Is Here For Your Business
Protecting your livelihood is our primary purpose. Whether it’s through comprehensive restaurant insurance policies or our vast library of free tips and tricks to mitigating liabilities, Society Insurance is here for you.
For more information on how we can help your business, get in touch with a local agent today.