At VertiSource
HR®, we know it is important to
examine every component of the internal business processes, especially on a
small business budget. In this post, we will focus on payroll and HR expenses,
with some tips on how to maximize your costs.
According to
the Small Business
Chronicle[1] , HR expenses should be budgeted in
the following ways:
● Cost Allocation-
How you allocate HR expenses
relates to your organization's structure and business philosophy. “A
single-entity business would centralize its human resources costs into one
budget, while a firm with multiple locations might opt to include HR-related
line items for each unit's portion of compensation, training and recruitment
expenses.”
●
Recruitment-
The HR budget should support your organization's strategic plan and objectives
for the year, which requires estimating the number of workers needed. Factor in
costs related to recruitment such as advertising, background checks, travel,
relocation and any pre-employment testing you do.
●
Training
and Development- Your HR budget has to cover both job
skills and safety compliance, as well as any addition certification you offer
to your employees.
●
Administration-
You have to leave room in the budget for morale boosting activities. “Assign HR
activities that support employee engagement such as recognition initiatives,
awards for service milestones, company picnics and employee birthdays to a
separate budget account or include them as a line item in the general HR
administration budget.”
●
Compensations
and Benefits- Last, but certainly not least, your
employees need to be paid for their work and you need to be aware of the
additional costs and taxes that go with this. Calculate anticipated changes in
federally mandated employment costs such as Social Security or group life insurance
and budget for overtime and incentive programs.
Speaking of
Payroll, there are many ways to implement small business budgeting practices
and still give your employees the compensation and benefits they need. The payroll process, if ran
inefficiently, can drain essential resources from your business budget. Here
are some effective ways to maximize our expenses:
●
Hire a payroll company. Taking advantage
of payroll services that handle expenses for you will promote efficiency and
organization within your business. A service such as this can handle the
intricacies of employee compensation, reduce your business’ payroll expenses
through digital recordkeeping and automated services like employee time
tracking that reduce the margin for error. Companies, like us at VertiSource
HR®, can cost-effectively outsource your payroll and save you time as
well!
●
If your budget is still too small to
afford a payroll company, check with your bank to see if they offer payroll
services. Usually, banks consider payroll processing a courtesy, which means
the price will likely be substantially lower than what other payroll processing
companies charge.
●
Remember to set your budget to include
payroll tax. Wages are just the beginning. There is also federal and state
payroll taxes and, depending upon the state in which your business is located,
there are other employment taxes as well. Plus, you are required to match
Social Security and Medicare that is withheld from your employee’s pay.
●
When it’s time to give
raises, consider providing for your employees in the form of tax-free fringe
benefits such as health, dental, and vision insurance, child care subsidy, a
cell phone or a retirement plan, as a way to maximize your budget.
Call or message a VertiSource HR®
rep today so we can help your small business grow! We provide integrated
services to effectively manage critical human resource responsibilities and
employer risks. Take advantage of our payroll and human resource services so
you can focus on the future of your business, worry free.
Kailey Brennan, VertiSource HR® Blogger
