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 , 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 atVertiSource 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