For most startups, payroll can be anything but simple. Sure, when you have just a few employees and your business is in its earliest stages, payroll might be straightforward enough. But as most leaders and founders can understand, payroll can quickly become complicated, especially as your organization grows and starts to work with different types of employees.
The truth is that paying many employees with different types of compensation across various geographic areas can be challenging. Complex payroll situations can make any founder’s or leader’s head spin, making compensating your team members far more taxing.
The paradox is that even when payroll needs are complex, there is still an expectation from team members that their payroll will be accurate and on time. And unfortunately, payroll errors can have negative consequences for both startups and employees.
But we have good news for you: you can simplify payroll situations and easily address your payroll needs.
What is the Impact of Payroll Problems?
In some aspects of a startup, there is often “wiggle room,” or room for trial-and-error and figuring things out as you go. This is definitely not the case when it comes to payroll needs, which means that it’s vital to address complex payroll scenarios accurately every pay period.
The impacts of payroll problems can be widespread and damaging for startups and their team members. Research tells us that 66% of Americans say they “would experience financial difficulty if their paychecks were delayed by one week,” while 63% of Americans live paycheck-to-paycheck. Employees also appear to have a very low tolerance for paycheck issues, with nearly half saying they would start looking for a new job after two incidents.
Startups can also suffer when it comes to payroll problems. The IRS estimates that 40% of small to mid-sized businesses are penalized because of them.
And payroll problems don’t only have the power to impact a business financially. Delayed or problematic payroll can negatively impact employee morale, damage a startup’s reputation, and even lead to high employee turnover.
Payroll problems are definitely something to avoid. But when a startup deals with complex payroll situations, getting it right every time can be challenging.
What Makes Payroll So Complex?
There are a few factors that can create complex payroll situations for startups. First, many startups are not just dealing with one type of compensation. For example, your business might have full-time employees, part-time employees, and freelancers.
Not only that, but your team members likely receive overtime pay, commission, bonuses, and benefits. This means that you’re calculating their regular wages and many other types of compensation.
Startups also need to make sure they comply when it comes to both labor laws and the tax code. For example, certain labor laws might govern payment types, overtime procedures, and minimum wage requirements. And when it comes to taxes, your startup likely needs to calculate and execute payroll withholdings for your employees.
There are also payroll complexities if you have a team spread out across different states or countries. For example, if your team is working internationally, you might be subject to country-specific payment procedures and tax laws, which can complicate things.
How Does Having a Global Team Make it Tougher?
Several aspects of payroll become far more complicated if you have a global team.
Here’s how:
- Compliance – First and foremost, each country has its own laws, rules, and regulations regarding payroll. These differences are relevant for taxes, social security, and labor laws.
- Currencies – You might have to manage payroll in different currencies and conversions when paying a global team. This also means navigating exchange rates to ensure your employees are correctly paid.
- Available technology – Technology availability and usage differs from country to country, and the payroll systems used in one country might not be the same in another.
- Cultural norms – The frequency of pay, processes around compensation, benefit expectations, and other cultural norms can influence the payroll process and make it more challenging to navigate.
6 Ways to Simplify Complex Payroll
Even with an international team, complex payroll doesn’t have to be your reality. Here are six ways to simplify payroll situations.
1. Standardize Your Payroll Processes
Simplifying complex payroll starts with your processes and procedures around it. Sure, you might have sorted things out, like your payroll schedule, but what about the more complex scenarios?
For example, how is payroll handled when you start working with a new freelancer from a different country? What are your procedures for tracking employee overtime hours and ensuring accurate compensation?
In order to standardize your processes, you can establish clear guidelines and expectations to ensure you have a solid system for tracking employee hours and categorizing types of work.
2. Ensure You’re Compliant
From changes in tax laws to shifts in local regulations, you must be compliant with laws and regulations and stay up-to-date on changes. In order to ensure your business is fully compliant, you can start by creating and following a compliance checklist. After you’re sure your business is up-to-speed on compliance, check back regularly and stay abreast of any changes.
3. Communicate Clearly and Effectively
When it comes to complex payroll, clear and effective communication is your best friend. For example, early communication should be around payroll needs and expectations when onboarding employees.
If you’re working with freelancers or part-time employees, there should also be discussion around payroll processes, technological systems, and invoicing procedures. Share payroll schedules and system changes as early and clearly as possible.
4. Centralize Your Payroll Systems
In order to simplify complex payroll, you should look for ways to centralize your operations. For example, instead of using several different vendors, look for a one-stop shop for your needs, or reduce the number of vendors you use for your payroll operations. Instead of managing several different accounts, logins, processes, and systems, you can centralize your operations.
5. Shore Up Your Tech Stack to Simplify Payroll
From digital time cards to full-service payroll software, startups should use digital payroll tools which elevate their systems and simplify their processes. Today, plenty of payroll tools and technologies can make your life easier, reduce workloads on staff, and make it easier for employees to input their information. Digital payroll tools can also vastly reduce the risk of errors and ensure accuracy, even across different geographic regions.
6. Outsource Your Payroll Solutions
As most startup founders and leaders will understand, payroll is truly a world of its own. It is a full undertaking, can be endlessly complex, and is critical to get right.
Outsourcing your payroll solutions is an excellent way of taking care of complex needs while vastly improving internal workloads. When you outsource your payroll, you’ll avoid errors, ensure your business is always compliant, and find that your calculations and data are always 100% taken care of.
Typically, outsourced payroll solutions don’t just end at cutting checks. Here at Hiline, our outsourced payroll services also cover HR needs. This includes payroll processing, deduction setup, employee expense reimbursement, employee onboarding and off-boarding, file audits and record keeping, job description, and offer letter development. We can also cover worker’s comp, employee benefits support, and contractor management.
Don't Let Complex Payroll Hold Your Finance Operations Back
Payroll might be critical, but it doesn’t have to be complicated for you to deal with as a startup founder or leader. Even challenging payroll scenarios and unusual payment situations can be easily navigated when you take steps to simplify complex payroll. By standardizing your processes, ensuring you’re compliant, communicating with your team, and outsourcing your payroll and HR needs, you can seamlessly navigate complex payroll and focus on what you do best.
At Hiline, we take your payroll and HR needs seriously. We know that they can seem more like a luxury for growing companies, but we can assure you they’re necessary to the health of your business.
That’s why we’re a specialist company offering state-of-the-art, fully-managed payroll services to save you time, money, and compliance headaches. Get in touch about how our HR and payroll services can support you.
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