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When Times Are Tough, Honesty is The Best Policy

Author: Keith Huggett

For many small businesses with tight cash flow, whether or not you make payroll from month to month can be a major stress factor. Obviously this situation should be avoided at all costs, but it does happen now and then, and it's important to know how to handle it.

So what happens if you can't make payroll? The following steps can help you get out of this sticky situation:

• Be honest with your employees: If you know in advance that you don't have sufficient payroll funds, don't wait until the last minute to alert your employees. Give them as much advance notice as you can so they can prepare their finances accordingly.
• Get financing as soon as possible: Not paying your employees on time can result in tax penalties and other financial liabilities, so it's important to come up with the necessary cash as soon as possible. You may have to sell assets, tap a credit line, lay off employees, transfer money from personal bank accounts or ask friends or family for financial assistance.
• Use the resources you have: If you have outstanding receivables, you may be able to get cash quickly. One method is to offer a deep discount directly to the customer that owes you money in exchange for immediate payment. However, this course of action will certainly alert customers that your business is in trouble. An alternative method is to factor receivables by working with a third party who will give you a portion of your receivables up front in exchange for the full amount when invoices are paid.

If you frequently find yourself unsure whether you'll be able to make payroll, perhaps it's time to consider restructuring the business, or setting up measures that will seek to prevent this situation.

Setting up outsourced bookkeeping and payroll can help you keep cash flow on track so you can make payroll each pay period. Having a dedicated outsourced team means that your accounts payable and receivable are constantly monitored, no matter how busy you get. Call the experts at The Tax Office, Inc. today to learn more.

Avoid Common Payroll Errors

Author: Keith Huggett

Calculating Your Salary May Be a Challenge

Author: Keith Huggett

You wouldn't think that one of the most difficult decisions that comes with owning a business is figuring out how much to pay yourself, but this is the case for many business owners. The challenge for most people is not taking a salary that is too high, but one that is too low. Taking a lower salary at the start can help keep expenses down and free up more cash to invest into the business, but what happens if the business cash flow can't support a higher salary in the future? Planning ahead and using projections can help you avoid this problem.

So how do you decide the appropriate salary for yourself as a business owner? The tips below can help you come up with a reasonable number:

• Calculate your annual expenses: If you don't make enough to cover your personal expenses, you won't be able to focus on growing the business. Add up everything you spend in a year and don't forget to include all the little details. In this case, overestimating is better than underestimating. Divide the number by 12 to calculate your minimum monthly salary. Subtract any other sources of income or savings you intend to use.

• Figure out what you're worth: Owning a business does not mean that you should be unreasonably poor. Find out what other business owners in your industry typically make and do your best to match that. You can also base your salary on what you would get if you were employed by another company at the same level.

• Find out what the business can afford: You know how much you need to make each month to cover your expenses, and you know how much others in comparable positions are making, but the most important number is the one that is actually possible.  Use cash flow projections to see how much surplus you might have. Do this on a periodic basis as your business grows and adjust your salary accordingly.

Owning a business does not mean that you have to go it alone. Contact The Tax Office, Inc. today for help with bookkeeping, tax preparation and business advice.

Tips to Make Payroll Taxes Simpler and Less Frustrating

Author: Keith Huggett

If running payroll was a simple task, there wouldn't be so many products and services available to help you do it. However, payroll taxes can make paying your employees very complicated, especially if you operate in multiple states. The ramifications of not being compliant with the regulations can become quite costly, so it is worth ensuring that your payroll system is properly set up and managed by an experienced professional.

There are several pitfalls you need to avoid when it comes to payroll taxes. Follow these tips to avoid incurring expensive penalties and fines:

• Pay the correct amount - Tax laws are not at all static. In fact, they can even change during the course of a year, so you need to be aware of changes that may affect your business. Payroll taxes have changed several times in the past few years, and it is likely that they will continue to do so. When the payroll tax rate changes, you need to ensure that your system is updated accordingly so that you can correctly calculate both the amount to withhold from employees and your company's payroll tax liability.
• Pay on time - Depending on the size of your business, you may need to make quarterly, monthly or even weekly payroll tax payments to both federal and state authorities. Late payments come with penalties, so it is important to make timely deposits. 
• File on time - Your required payment schedule may be different from your filing schedule. For example, you may be required to make monthly payroll deposits, while you only need to submit forms once each quarter. You may need to file yet another form on an annual basis. It is of course critical that these forms be properly completed and submitted in a timely manner.

The best way to ensure that your payroll taxes are filed correctly and on time is to outsource them to a qualified provider. The Tax Office offers a range of payroll services to meet the needs of any business. In fact, we'll help you find the right solution for your business with a free analysis. Contact us today to learn more.

Why Going Online May Save You Headaches and Mistakes

Author: Keith Huggett

Payroll is a tedious task that is often relegated by management to a few frantic hours before payday. Manual payroll entry and last-minute processing can lead to small errors that become disastrous for the business. Did you know that a small mistake in calculations that causes improper overtime compensation can result in a fine of $250 to $1,000 per employee, per pay period? Since these types of errors are often overlooked, they may go on for weeks and create a risk to the company worth thousands of dollars.

An online payroll service can help you keep numbers accurate, payroll timely and reduce the likelihood your company will face such sanctions and fines. Here are five other reasons to use an online payroll service:

• Online payroll systems are fast. Once you create necessary rule sets and load employees, you usually only need to enter the hours worked. The system will complete calculations and prompt appropriate payment. Most online systems work with automated payment options as well.
• When you use an online payroll service, you get the benefit of expert understanding regarding regulations and withholding's. You never have to worry about payroll tax surprises at the end of the year.
• Moving from manual entry to a more systemic process reduces labor costs by cutting down on in-house data entry.
• An online payroll service is accessible from anywhere you travel and may also work with your mobile devices, eliminating the need to be at the office for payday related duties.
• Online data delivers secure redundancy for payroll records, which may be required by regulatory bodies in your industry. Even if data redundancy is not required, it is advisable to avoid trouble during catastrophic events or server failure.

If you are interested in reducing your labor costs, increasing payroll accuracy and ensuring your company is protected against regulatory issues, then The Tax Office is ready to help. Our Cloud Payroll Services are simple and flexible. Contact us today for a free needs analysis and information on how we can increase the efficiency of your payroll process.