Running a company is a lot like juggling. There are so many different balls to manage and keep in the air, and you absolutely can’t let any of them drop either. Keeping an honest and organized payroll is one of the more important balls not to drop, as the quality of your payroll says a lot about your company and the way that is run. Keeping your payroll precisely organized can also save you a major headache in having to figure out exactly how much you spent and when you spent it when tax season comes around.
When you run a business, you have to withhold a certain amount of money from each employee paycheck for such things as federal tax, state tax, medicare, and social security. If you aren’t accurately managing your payroll and keeping a close eye on how much money you’re paying and withholding, you could run into lots of serious and costly problems down the road. You may have to hire outside accountants or companies like eebs to come in and clean up the mess. You also run the risk of facing pricy tax penalties, and even run the risk of being audited by the IRS.
It’s also good for your employee’s morale to accurately manage your payroll. When an employee comes to work for you, they trust that they will be paid all that they are owed and that the tax withholdings will be done neat and by the book. If your payroll is managed in a sloppy manner, the likelihood that you will make a mistake on an employee’s check goes up exponentially. This leads to more time spent on your end fixing these issues, and you run the risk of embittering your employees against you which could lead to decreased productivity or lots of employees quitting.
It also looks good to outside parties if your payroll is clean and well managed. It makes you look successful and organized to anyone who may need to see the books. It will look good for loan officers that you are looking to get a business loan from, and it will also please any potential outside investors to know that they are trusting their investments to a company that is run in an orderly and transparent fashion. If you present a payroll book that is filled inconsistencies or is filled with tons of mistakes, it will fail to generate any confidence in your business as a viable one and put off any potential loan officers or investors.
It’s also crucial for you as the owner to keep your payroll in order. You can see any growth or shrink in your business’ profits and can adjust how you run your company based on that. As the decision maker, you want to have all the facts clearly laid out in front of you and plain to see. This way you can address any troubling trends that may be starting to arise, or you can celebrate the positive trends that you are noticing. The direction your company is taking will be way more clear to you if you have accurate payroll books.