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Outsource payroll to manage the human side of COVID-19

woman shop owner

Managing and supporting employees is one of the most challenging issues facing businesses as they adapt to the wrenching changes caused by COVID-19. Keeping up with the unfolding employee situation as we move towards recovery will be a key to survival and success for businesses everywhere.  

Some states have lifted their stay-at-home restrictions all together. Other states are opting to require counties with densely populated areas and high levels of cases to continue to shelter in place, while relaxing restrictions in less-affected areas. No matter where you live or when you choose to re-open, you’ll need to manage your teams with more flexibility and speed. Outsourcing your payroll and other employee management needs together can save you time, help you to be more agile and keep your teams motivated.

First things first: Think about your company needs

You need to consider your overall operations in the coming months. Think about whether there are parts of the products and services you offer that will be more or less important in the future. If your company went through the Great Recession, it may be helpful to think about how you were impacted by the economic downturn at that time. How busy do you expect to be? Which departments and types of jobs were most essential as business resumed? Which were least essential? For instance, a bakery might have very little event catering in the next few months but may need more delivery drivers.

Next: Think about your employees

The answers to these questions will determine your ability to forecast future staffing needs. Larger businesses with multiple leaders or stakeholders will likely require a lengthy discussion as well as a willingness to change course as business — and the economy itself — fluctuates. It’s best to slightly underestimate need; if employees stop their unemployment insurance (UI) claims only to be sent home again after a few days, their continuity of income may suffer.  It’s also easier administratively if you only need to furlough and then recall an employee once. And, you can always recall more employees once you’re certain the need exists.

Deciding which employees to return to the workplace following a furlough or temporary layoff, and in what order you’ll call them back, will require an individualized analysis for each organization. It will be best if you have a clear communication strategy and message from the outset and put people’s minds at ease about the future. It’s important to communicate your plan to all employees – even the groups not included in subsequent phases of re-opening. It’s the considerate move to make, and it enables your employees to plan ahead and ensure their own financial well-being. 

Documentation is as important as ever. Documentation should be in writing and easily understood by an outsider to your business. Document why you chose to bring back certain groups of employees before others, as well as why each employee was chosen before others in their job type. Employers shouldn’t assume that their motives won’t be questioned. 

Also, in an era of social media and online reviews — especially post-COVID-19, when many businesses will be fighting to rebuild their customer base — employers will benefit from showing compassion. This on-demand webinar, Compliance Matters: Layoffs, Furloughs and Recalls, has more ideas on how to welcome back your employees post-pandemic.  

Consider outsourcing your payroll

All of this adds up to a lot of managerial effort as the business landscape continues to evolve rapidly. For many business owners and operators, there’s rarely a moment of downtime. That makes handling payroll and employment taxes just one more task on a lengthy To-Do list. Business owners who integrate their payroll management services with employee management technologies can glean immediate benefits, from increased productivity and reduced business risk to happier employees. Working with an experienced, professional payroll processor helps you increase both your confidence and your control. 

Here are seven good reasons to outsource this critical aspect of your business.

1. Free up time. What could you do with 200 extra working hours each year? Few things are as valuable to your business’s success as your focus on day-to-day strategy and operations. When the average small business owner spends nearly 260 hours per year on payroll, the case for outsourcing becomes clear. Curious about that calculation? Consider everything that goes into payroll processing: 

  • Collecting employee data for W-9s
  • Calculating hours, deductions, paid time off and taxes
  • Printing, signing and distributing checks
  • Processing direct deposit payments
  • Generating reports
  • Prepping your payroll taxes
  • Keeping employee records current and accurate

The more staff and locations you oversee, the greater your burden. Outsourcing to a qualified payroll provider frees up your time and guarantees peace-of-mind for you and your staff; if you’re on vacation, out sick or simply busy with other business activities, your payroll stays on schedule. 

2. Help ensure compliance. As an employer, you’re responsible for monitoring hundreds of constantly changing regulations, including federal, state and local tax rules, the newest wage laws and compliance with the Affordable Care Act (ACA). It takes concerted effort—with significant consequences for missteps. Every year, the IRS penalizes as many as one in three small business owners for payroll tax errors; filing an incorrect return for just one employee under the ACA can incur a $500 penalty.

Outsourcing lets you focus on your strengths as a business owner (after all, you didn’t go into business just to be a payroll employee!), while simultaneously working with experts who handle payroll and employment taxes every day. It’s your payroll provider’s job to issue your payroll accurately, completely and on-time—every time. They’re also a great resource for questions and best practices that increase your efficiency and keep you compliant. 

3. Boost employee satisfaction. Managing payroll for hourly, part-time and seasonal workers can be labor-intensive. Turnover tends to be high in some industries, like restaurants, creating constant onboarding paperwork. Some staff want physical checks; others prefer direct deposit. Younger workers may ask for prepaid cards or a virtual check. Then there’s the challenge of staying current with each employee’s address changes, withholding preferences and deductions. The larger your workforce, the more time-consuming this process becomes. 

Outsourcing alleviates this pressure and makes it easy to offer multiple payment options (without adding to your workload). It turns your payroll into an employee recruiting and engagement tool, thanks to secure and intuitive online tools where staff can download pay stubs, choose their preferred payment method and update contact information—all while freeing you for more valuable activities. 

restaurant owner

4. Improve data security. Managing payroll in-house adds unnecessary risk to your restaurant or food service business, especially if you rely on paper records or outdated technology. From Social Security and bank account numbers to personal contact information, you must safeguard a variety of sensitive data. A single data breach, identity theft or fraud incident will not only impact your bottom line, but your employees’ trust and your brand reputation.

Data security is a standard part of your service with a reputable payroll provider. Most combine encryption technology, digital backups and best-in-class cloud security to create a “digital fortress” that protects your data. There’s no need to maintain sensitive data onsite. 

5. Scale with ease. For certain industries, like restaurants, the ability to scale is more critical. When you’re gearing up for the holidays or hiring for the summer rush, the last thing your restaurant needs is more administrative tasks. Outsourcing your payroll lets you scale up quickly. You can add seasonal workers, open new locations or staff up for catering or delivery, knowing your provider has you covered. You’ll have a standard process for onboarding and paying new employees—and a competitive advantage with this efficient workflow. Just like figuring per-plate costs keeps your menu prices competitive, tallying up the resources you allocate to your payroll shows the bottom-line benefits of outsourcing.

6. Find new talent. If your furloughed employees found new work during the pandemic, your business will need to find new talent as well. Today’s on-demand people management technologies are no longer just for large corporations. There are new options available to help small business owners scale more effectively and provide support and assistance with employee handbooks, retirement services and workers’ compensation programs. These solutions can also make it easier for you to identify top candidates in a fraction of the time and cost of traditional hiring processes – and potentially help you save thousands of dollars in taxes. 

Your business can get off to a strong start using employee management technologies that help you save time by quickly posting your open positions to multiple job boards and social media sites in just a few clicks. Text-to-Apply solutions are perfect for attracting today’s generation of younger, more tech-savvy applicants, who spend more time looking online to find a job, instead of walking into shops to pick up a paper application. 

A Text to Apply feature allows job seekers to quickly apply to your open positions through their smart phones. These digital resumes are more easily shared with other hiring managers. Your business also has the option to ask optional pre-screening questions, automatically schedule interviews and send electronic offer letters. Not to mention, eliminating paper applications from your business provides time and cost savings – and helping you stay more organized. 

7.    Uncover tax credits. Once an applicant has applied, some offerings can automatically identify applicants that help your business become eligible for tax credits. For example, systems can ‘screen’ your existing employees and new hires to determine if your business qualifies for both retroactive and ongoing federal and state tax credits based on your physical location(s). 

Employee management platforms can also screen and easily identify job seekers who are eligible for a Work Opportunity Tax Credit. The Worker Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain groups who have consistently faced significant barriers to employment. Hires can come from ten different targeted groups, ranging from qualified veterans to public assistance recipients and designated community residents, to summer youth employees.

For small business owners, the WOTC reduces your cost of doing business. These tax credit savings range from hundreds to tens of thousands of dollars in tax savings per qualified new hire. The WOTC can reduce your federal income tax liability by as much $2,400 to $9,600 for each qualified new hire it makes in the first year or two of employment. Best of all, there is no limit on the number of individuals an employer can hire to qualify to claim the tax credit. And, WOTC credits can be carried forward for up to 20 years.

Automating the WOTC screening and application process – and streamlining the required documentation that you need to complete Form 5884 (which you are required to file with your tax return) - guarantees that your business will receive a tax credit, or you will receive a full refund of your filing fee.

Now is the time to put a plan in place 

The COVID-19 pandemic has resulted in small business owners feeling like they have lost control. While there are many unknowns that remain as businesses across the country focus on re-opening, putting a plan and new tools in place can be empowering. Focus on what is in your control as a business owner to successfully emerge from the pandemic to enhance your business continuity, and new digital tools to help guide the way.  

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