When you’re running a business, you want to remove as many barriers to profitability as possible; if there’s something standing between where you are now and where you want to be financially, you need to identify it and deal with it as soon as possible.
There are a ton of different factors that could impact your business profits, from inaccurate time tracking to increased office costs. But there’s something that you might not necessarily expect, but can have a huge impact on your overall profitability—and that’s your payroll system.
So, the question is, in what ways could your payroll system be standing between you and profitability? And, more importantly, what can you do about it?
As the old saying goes, “time is money.” And one of the main ways your payroll system can be driving down your business’ overall profitability? Time costs.
The more time it takes you to navigate your payroll system, the more time you’re spending away from other important or profit generating tasks in your business—and the less profitable your business will be as a result.
There are a variety of ways your payroll system can cost you time each day, including:
- A challenging interface. Some payroll systems are just more complicated than they need to be. If you don’t completely understand the features of your payroll system or how to use them to track employee time and run payroll, you’re going to spend a lot of time each pay period trying to figure things out—time that could be better spent elsewhere.
- IT issues. If your payroll system is prone to bugs, glitches, breakdowns, slowdowns, or other IT issues, you’re going to be spending a lot of time with their customer service or tech support teams trying to troubleshoot the issue—which, again, is time you could’ve spent driving profit for your business.
- Lack of automation. Thanks to advances in automation technology, many payroll systems will automatically manage all things payroll (for example, tracking employee hours and calculating tax withholdings). If you’re manually inputting your payroll data into your payroll system (and then processing it to confirm accurate hours, tax withholdings, and check amounts), you’re unnecessarily losing time—and unnecessarily losing profits in the process.
Bottom line? Your time is your most precious resource. The more time you spend driving profits for your business, the more successful you’ll be. But the wrong payroll system can take up far too much of your time, keeping you away from the important, profit generating tasks in your business—and causing your profits to take a hit.
The cost of mistakes
You want accuracy in all areas of your business. But if there’s one process you need to get right, it’s payroll. Making mistakes on payroll can cost your business in a number of different ways, including:
- Disputes with employees. Your employees want and deserve to be paid accurately and on-time. Payroll mistakes can lead to disputes with your team, and if those disputes aren’t resolved in a timely fashion or there continue to be inaccuracies on your payroll, it can cause top performers to leave your company—which can be devastating to your success and profitability.
- Issues with the IRS. One agency you don’t want to make a mistake with is the IRS. If your tax withholdings or payroll tax payments are inaccurate, it can lead to consequences with the IRS, including steep fees, penalties, or an audit.
- Unexpected costs. If there are mistakes with your payroll (for example, if you’re not tracking hours and paying your team accurately), you’ll eventually find yourself facing unexpected (and potentially steep) costs, which can throw off your budget and decrease your company’s profitability.
- Time costs to fix errors. We already covered how time costs can negatively impact your profitability. And if you have to spend hours each pay period reviewing inaccuracies and correcting mistakes in your payroll system, it’s just going to add to your business’ time costs.
When choosing a payroll service, it’s important to make sure that the system you choose will process your payroll and tax withholdings 100% accurately; otherwise, those mistakes can cost you business in a huge way.
Your business’ profitability is all based on money in versus money out. The less money you spend and the more money you bring in, the more profitable you’ll be. And, on the flip side, the more money you spend and the less money you bring in, the less profitable you’ll be.
So, one of the simplest ways your payroll system may be standing between you and profitability? Financial costs.
There are a ton of payroll systems out there that are prohibitively expensive. Not only do you have to pay a fee every time you run payroll, but you’ll also get hit with additional fees for check printing, adding new employees, sending W-2 and 1099-MISC forms to your employees or contractors at tax time...basically, any opportunity there is to upcharge or slap you with a fee, the payroll provider will take advantage of that.
And over time, those additional fees and charges can add up in a major way, increasing your expenses and having a negative impact on your business’ profitability. Plus, unexpected fees and charges can make it hard to create accurate financial projections or budgets, which can also put your business at risk of going into the red.
The point is, there are a lot of costs to using the wrong payroll system—but the costs that most directly impact your bottom line are the financial costs.
How Hourly can help you recoup your payroll system costs and increase your profitability
Between the time costs, financial costs, and the costs of inaccuracies and mistakes, using the wrong payroll system can wreak havoc on your business.
But your payroll system doesn’t have to stand between you and profitability. With the right payroll system, you won’t have to spend time, energy, and money on trying to navigate the payroll process—and you can use that time, energy, and money to increase profits for your business.
At Hourly, we’re committed to making the payroll process streamlined, accurate, and affordable—and to make it all possible with a few swipes on your mobile device. All of the Hourly app’s features are designed to make payroll (and your life!) as simple as possible, including:
- Process payroll, track employee time, and manage workers’ comp—all from the same platform
- Support for hourly and salaried employees
- Support for W-2’s and 1099s
- Automatic overtime calculation
- Unlimited payroll runs
- Weekly, bi-weekly, semi-monthly, and monthly pay periods
- Compliance features
- Expense reporting
Want to find out how Hourly can help you recoup the costs of your payroll system (and increase your profitability in the process)? Get started and sign up for your free trial today!