Employing people means managing payroll. Luckily that doesn’t have to be difficult whether you do it in-house or outsource it. This checklist will help you set up the perfect payroll system for your retail business.
12 steps to your perfect retail business payroll system
If you've never needed a payroll system before, you may not know where to start. This checklist will help you set up one that best suits your business.
1. Decide whether to manage payroll in-house or outsource it
If you have the resources, you could handle the work in-house. This gives you more control, and good software makes it quite easy to do. Or you may prefer to outsource the work to a bookkeeper, accountant or payroll company.
2. Ask a bookkeeper or accountant for advice about best practice
Accountants and bookkeepers deal with small business payroll all the time and they know which systems work for retail businesses. If you don’t already have one, now is a good time to hire an accountant or bookkeeper.
3. Set up a system that’s easy to use and works with you
You’ll need a system that works with you. Online payroll software:
lets you work from anywhere and at any time, wherever there's an internet connection
is designed to be easy to use
lets you share data with your bookkeeper or accountant.
4. Ensure your payroll system can handle all the necessary employee records
Some of the items it should be able to process include:
new employment documentation
full details of each employee, such as name, address and IRD number
bank account details if the employee wants a direct deposit
salary details for all staff, including amounts and dates of payment
tax codes and returns
benefits, KiwiSaver, healthcare and bonuses
sick days and holidays
maternity and paternity leave
5. Be sure to comply with all employment and payroll legislation
Check out minimum wage legislation and end-of-year reporting requirements. Make sure you comply with these and other relevant laws (such as overtime). If you don’t, you might be audited – and fined.
6. Ensure your records are always accurate and up to date
Accuracy is vital. Even a small mistake could be expensive to put right. Good payroll accounting software helps, by automating a lot of the work. That reduces the chance of errors through duplicate data entry.
7. Know the difference between a permanent employee and a seasonal employee
You might find you need to employ staff on a seasonal basis to cover busy periods, like in the build up to Christmas. Payroll will vary for different people and getting it wrong can be expensive. Talk to your accountant or local tax office for guidance if you need it.
8. Choose the most appropriate payment period for your staff
Employees are usually paid either weekly, fortnightly or monthly. You’ll need a system that can handle this, as well as variable payment schedules if you use them.
9. Set tax filing and payment reminders so you never miss a deadline
Governments require regular staff payment reports. Sometimes these are quarterly or yearly. But sometimes you have to report every payment when it’s made. Set up reminders in your accounting software. Then you’ll never have to worry about missing a deadline.
10. Set up direct bank payments to keep your employees happy
Late payments can cause stress for your employees. Avoid mistakes by setting up automatic, scheduled payments. Smart payroll software will let you make staff payments directly from your business bank account.
11. Make time to check payroll on a regular basis, even if you outsource it
Payroll isn’t something you can set up and forget about. You need to keep tabs on what’s happening, so use a system that ties in with your accounting software. Then you can generate reports that show you the big picture.
12. Keep your staff employment records for as long as is legally required
Usually you must keep records for seven years. Check local laws to find out how long you should keep yours.
Good preparation will save you time in the future
Setting up a payroll system shouldn't be rushed. Payroll is a fundamental part of your retail business, so it pays to get it right the first time.
The right system will help you understand exactly how your budget is being spent. It will simplify the work so you can concentrate on running your business. And it will help keep your employees happy – and therefore productive.